Compañía de Minas Buenaventura S.A.A. Q1 2023 Earnings Call
[music].
Good day, ladies and gentlemen, and welcome to the Companhia <unk> de Minas Buenaventura first quarter 2023 earnings results Conference call.
At this time all participants are in a listen only mode and please note that this event is being recorded.
I would now like to introduce your host for today's call Mr. Gabriel Gabriel.
The last <unk>.
Investor Relations. If this lasts you may begin.
Good morning, everyone and thank you for joining us today.
Our first quarter results.
My discussion will be led by Mr. Leandro Garcia Chief Executive Officer.
Our call today and available for your questions Army still Daniela Omega Chief Financial Officer.
Mr. Juan Carlos Ortiz, Vice President of operations, Mr. Aldo Mysore, Vice President of business development and commercial.
100 out of Matzo, Vice president of sustainability.
And so Martha.
And the projects you.
Mr. Juan Carlos Salazar, Yodlee and exploration spending are Mr. Roque.
Oh, Yeah, chairman and he's been a director.
Before I hung our Colo her let me first touch on a few items.
One endurance 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 assumptions.
Management believes that these assumptions.
Our branches are reasonable in the view of the currently available information.
You are cautioned not to place undue reliance on these forward looking statements.
Urge you to read the full disclosure concerning forward looking statements within the earnings results press release issued on April seven three.
Sweet.
Let me now turn the call to Mr. Leandro Garcia.
Thank you.
Good morning to all and thank you for attending this conference call.
We are pleased to present the results for the first quarter 2023 from company I mean, that's what I meant.
Got it.
We have prepared a powerpoint presentation, which is available on our weight what baked before we go farther please take a moment to review our cautionary statement shown on slide number two.
Moving onto with like three.
Highlights were as follows.
First quarter 'twenty three EBITDA from direct operations was $51.6 million compared to the $86 9 million reported.
A report during the first quarter of 'twenty two.
They beat the results do not include 300 million dollar from the sale of went up and put a stake in a court.
First quarter 'twenty three.
Clothing, I should say a company reached 181 $9 million compared to the $233 $7 million in the third quarter of 'twenty two.
Again <unk> never so do not include the 300 million dollar from the sale of wear now they put a stake in their court.
Quarter 23, net income from continuing operations reached $72 2 million compared to U S dollar $134 $7 million net income from continuing operations for the same period in 2022.
And Oregon.
Ore mined from its open pit wassa stockpile during the first quarter of 2021.
<unk> not read that you were in the quarter underground mine production.
Production increased to 9350 tons per day during the first quarter 'twenty three compare to the 7100 tons per day in one quarter.
First quarter 2022 plus.
Part of the ramp up to reach 10000 tonnes per day during 2023.
This is both.
Lip sync or will be treated that broke out processing plant in the second quarter or 23.
We're now into that cash position reached $173 million as of March 31st 2023, net debt increased to five <unk>.
$56 8 million with another that you might do a deal or three.
3.1, yes.
First quarter 'twenty three 'twenty three capital expenditures were $36 2 million compared to $19 90.
For the same period in 2022.
Third quarter 2023 capex includes $9 seven related to this on government projects, an $8.8 million related to you Brian.
On March.
'twenty four 'twenty March spending for 2023, several N V. I know total leave you on the evolution of $250 million.
And two that we've received.
49 million relative.
On April .
April 'twenty eight 'twenty 'twenty right.
During the first quarter.
This year operations have who's Guy knee were suspended for 10 days in February 2023 related to antigovernment purpose, which adversely impacted production and mine development operations were fully reestablished on February 16 2023.
Company.
Plans to recover these production in subsequent quarter and expect to meet 2023 production guidance.
Moving onto slide four.
Our financial highlights.
Although revenues during the first quarter were $186 million reduced 20% lower in comparison to the first quarter of 2022.
We mentioned before we're at least that from direct operations for the first quarter 2023 was 52 point $52 million in comparison to $87 million in the first quarter of 'twenty 'twenty. Two again these figures exclude the courtyard transaction effect.
Also our net income from continuing operations for the first quarter of 'twenty.
West 20 $73 million in comparison to a net income from continuing operations of $135 million during the same period in 2022, okay.
The capex.
$36 million in the first quarter of 2023 compare to the $20 million in the first quarter of 2022.
Moving on to slide five.
Double production.
Total gold attributable production in the first quarter of 2023, West 39, Belgium, or 21% lower than the few were reported in the same quarter of the previous year.
Decrease is mainly explained by the phone kind of mining operations expansion since the fourth quarter of 'twenty two.
Lower production up going more leg that's mining ore.
The piling work temporarily suspend ended the fourth quarter 2022.
Silver attributable production for this quarter was 1.1 million ounces, which shows a decrease of 38% compared to the figure reported on the first quarter of 2022.
This decrease in production was primarily due to their broker underground mine being the sole provider producing mine during the first quarter up 2023.
Hi.
The adverse impact of the 10 day suspension of activities help who can you do to protect its Greg.
Finally, our copper attributable.
Oil production for the first quarter of the year was close to 29000 metric tons or 7% increase compared to the same period in 2022.
Moving onto slide six all.
All in sustaining cost and cost applicable to sale.
The all in sustaining cost from our direct operations in the first quarter of 2020 through 'twenty, three sorry increased by 44% to 19.
<unk> 2004.
U S well U S dollar for oils.
The cost applicable to sales for the FERC quarter of 2023 were as follows for gold.
<unk> hundred 24 U S dollars per ounce, which is almost equal to a year ago.
For silver 21.5 U S dollar per ounce, which is 41% higher than a year ago or 1300, 94 U S. Dollar.
Metric ton, which is one person higher than a year ago for Cooper.
$738 per metric ton, which is 2%.
Comparison to a year ago finally in the case of zinc cost applicable to sales was one nine times, a 66 U S dollar per metric ton, which is 31% lower than a year ago.
Moving onto slide seven our pipeline of project update.
Here, we are presenting one is nap showed the current development level for each of our projects.
Moving on to slide eight.
Our projects in the case of you Buck our brownfield projects, we are focused on development.
Ron and exploration tunnel.
Are they the geological model suggest the opportunity to increase my novel, Great with less mining develop.
Environmental permit for underground exploration rented.
2023 environmental.
Or Miami.
On May 2023.
In the case of gravity and our Greenfield projects. We have finished yeah I got an E com site.
But are you just to start in may and definitely come by come cheap.
To start in July .
Authority I admit that.
Power line and.
Environmental impact assessment core R&D program in the third war show up by the third quarter of 2023.
Working.
The regional government our road main things right of way.
Rich I agree we have reached an agreement with godaddy community on oil transport piece.
Thank you for your attention and I will hand, the call back to the operator to open the line for your questions operator.
Please go ahead.
Ladies and gentlemen at this time, we will begin the question and answer session to join the question queue. You May Press Star and then one using a touchtone telephone to withdraw your question you May press star into.
If you are using a speaker phone, we do ask that you. Please pick up the handset prior depressing the keys to ensure the best sound quality.
Once again that is star and then one to join the question queue.
Our first question today comes from Carlos de Alba from Morgan Stanley . Please go ahead with your question.
Thank you and good morning, everyone.
First question is I think a little cat M D.
The stockpile that you have accumulated in Q1, how much and they were processing and this quarter you are processing this quarter.
Can you offer some color as to how much volumes of led I'm seeing will be solved during the second quarter from these stockpiles or would you really.
Expect to see the volumes really come in on the in the third quarter and given how the processes will take place and doing the second quarter.
And my second question has to do with.
We the balance sheet and the free cash flow and the free cash flow in the last several quarters has been for the most part negative.
And you're a dead cat increased net debt has increased and the maturity suddenly cheap cheap one one years.
And so how do you.
How are you going to address these situations are we're getting more and more questions from investors that are concerned about the balance sheet.
And settled out of it.
He's he's paying dividends, but but probably not as much as we would have thought and so yeah. Just any comments there maybe danielle on how youre going to address this situation what are the plans that the company has in order to to improve the balance sheet that would that'd be great.
Thank you Carlos for your questions.
Yeah.
Okay.
Firstly in terms of apparel.
Carlo will.
Do you have more color.
So the answer right now.
Is it in the order after we got the stockpile, there where you have a plan to pass through the plant during the year.
In terms of the.
Free cash flow.
We have some.
Our strategy, so proud to add capacity.
They've got a court there in terms of free.
Free cash flow.
Never.
Yes.
Third quarter has been characterized.
Direct right because they're using the working capital we have to use more way working copy that we have not read it.
For example in broke out.
And in that mode.
Daniel will give you.
For sure more.
Information about we chart I wear.
Instead, they're used for.
This coming year in all the projects we've got in there in their role.
Finally, the D V then oh several laterally.
Yeah.
We we already have received the first part of that even we yesterday for sure.
In the year.
Normally free board declare.
D V then.
One in <unk>.
Are they saying.
Yeah.
So we we should expect.
During the year.
Please Juan Carlos if you can give more color to it.
Sure sure. We ended up the first quarter of 2023 equal Kal with Conagra ratio of 200000 tonnes of.
Or you just don't buy it.
Who was who is treating this.
So we are mining D D.
In the coming quarters, we will increase that.
Well just look by up to around 1 million tons in the third quarter.
I mean down by the end of the year to finalize year with around 400000 tons.
Or you still buy it by the first quarter of 2024, we will complete the processes all of these materials.
Materially mainly all metallic which.
Areas, that's contained copper because we're getting closer and closer to the underground mine that's mainly cohort.
This is pretty much the same.
<unk>, which is the.
The volumes have seen of late that we're gonna be producing are in line with our guidance for the year. So it's only a.
The sequence of mining.
September .
Sequence of processing, all the way down to.
In the last quarter of the year.
First quarter of 2024, so nothing.
The report, we will finalize the processing of the outstanding.
By this fall.
You broke up.
Yeah.
And the Internet.
And our next question.
Oh, sorry.
On part of miserable answer of the question from Carla Thank you Carlos.
Question.
Yes temporarily we are having a deterioration of our.
Nevertheless ratio.
It's over a three times right now, but we believe this will be.
Reducing in the following quarter, when we have a better EBITDA during.
Last year the second.
Plenty to do which is counted within the period of this range. So we have a very low EBITDA.
We believe in the second quarter.
Quarter in the third quarter.
<unk> got an improving operation with.
After treating the stockpile.
Sean we are going to recover or do you have you done.
Meanwhile to be able to fund.
The impact on <unk>, we are going to use our own cash, but also we are going to have.
Race, a temporary facility, but we have already committed.
With local banks this could be.
It'd be up to speed.
$100 million this will permit us to fund temporarily.
Our our obligations.
Obligations no impact on Sunday Guardian.
And we will see if we need to.
And these the maturity of these of these Oh. This alone. However, we believe that with the dividends from Cerro Verde, We will receive we will receive me at the end of the year.
After starting.
Chaco and young Bucks in the third and fourth quarter, we will be able to.
As the year, we've never estimation of below three five times or next year.
When having to talk about new.
Working at full capacity.
I'm, having a bedroom EBITDA, we think about the leverage ratio could go down to levels of three times.
Thank you just one question on on the working capital in the quarter.
Andrew I alluded to that but actually the biggest negative impact that we can see he's not on inventories.
And it is on trade and other accounts payables almost $80 million negative impact.
Any any particular.
Our recent why such a big Delta.
Delta in that line.
Yes, Carlos as you remember last year, we experienced the same situation in December we registered a big amount of Oh bills from contract doors basically.
And broken.
And.
Tom Amato.
Registered.
The end of the year.
Were paid during the first quarter of the year Oh. This is a temporary effect as well.
Thank you.
And our next question comes from Tanya Jokers chronic from Scotiabank. Please go ahead with your question.
Good morning, everyone and thank you so much for taking my question.
I actually have three mm just for Daniel Daniel I know you.
Your Investor day material does guidance for that they've got that again could be about 120 million per annum for you for the Max sort of three year is that still a good number for us here.
Yes, Yeah, we were thinking about with the mobile.
The copper price right now so badly.
Right.
A very important.
The cash flow, we believe that the amount of dividend should be between 100 and a 100.
$2 million per year.
Okay, and then Daniel I think there's been no change to your capital cost guidance that you provided earlier this year.
Not at this point in time, we are still evaluating.
Any effect.
Our planning are real but.
At this point in time, we maintain the same level of Capex for this year.
Okay.
Can I just come back to thank everybody out and then my final question is actually back to Albert I'll call, but that's not fun that'd be out and you mentioned that we have.
Democrats.
During a power line paradigm while.
Projects can you remind me what that third workshop.
Am I getting a permit that would work.
I'm just back from here.
Thank you Daniele for your question David Berman.
We mentioned last year.
Construction permit.
Well here with us is rental market.
Vice President of projects. So he can explain in detail.
Following the following but.
Yes, hi.
So Atlanta is seen we do have the construction permits and the environmental permit for the mine. We're talking here isn't about that the permit for the power. We do have the process of this is first we get all the land will be hobbled huh.
We have the design ready Dawn and now it's about the environmental impact assessment.
Which is different.
And the environmental impact assessment for a mine so it's a decent regulation. So it's two different firms.
Okay, sorry, I misunderstood I had a family had all of the permits to go. So this is just the power line is paramount.
Yes.
Cancel culture, and what the community, how and understanding I'm not going to be happening in Q3 23. When are you expecting the power permit them.
Oh right. After then Thats a different regulation, yes towards the end of the year, we're going to have the construction permit for the power line Okay.
Alright is that the last permit I know you have the construction you have environmental that's power permit is that pretty much. It in terms of the bet Paramount.
Yeah.
There's a lot of operators.
Yes, but the biggest ones yes.
Yeah, no I understand that really the permits here and there, but the bigger one okay.
Okay and as you know is.
The power line permits are critical on the construction.
The timeline to get into production by mid 2025.
No.
Uh huh.
No.
Now we do have like a six month lead in there.
Okay. I think you could start a startup with generator, that's part of what I understand.
Yes, Okay. It is always the optimal toyed with empower name, but yes.
Okay I didn't know Fisher Fisher, Okay. Thank you for answering that and then maybe for Daniel again, sorry, Danielle just my understanding on al broke out and how we should model it in our model.
So I get the right cash flow coming out of this asset for you should I guess be thinking that year and I can tell Q3, we are mining like the copper from the underground.
And then the lagging stockpile, which youre, increasing the stockpile from 200000 tons Taylor Maryann.
Should I be thinking that that you know then starts to majority of it get you know come off in Q4 that gets processed and revenue patterns in Q4 and Q1.
Next year is that the majority of the revenue coming out from that stockpile and the topic just come and go it's really this year so to copper.
Revenue coming through the entire year lag on that in the zinc is coming in Q3, Q, sorry, Q3, Q4, and Q1 of next year.
And how I should think about it.
Maybe Carlos can explain the in the process of what we are going to.
Explode.
We do look at it please.
Other revenue and the cash flows coming through quarterly yes.
Yeah, I can explain that tenure.
The processing of the poly metallic or is just starting now in a brief.
D.
The speed at which we are mining is higher than the processing rate and the reason that we are building up saying at least from the stockpile.
But at the same time, we are processing deal.
In that situation, we will reach a peak of about 1 million tonnes stockpile by the third quarter. They were stock the mining or they'll compete with their brokers in the outstanding.
Bye.
As I mentioned that the stockpile will be completed process. It by the first quarter of two dozen pretty poor bad we are starting now.
We started the processing of the poly metallic ore so the revenue coming from the zinc and lead concentrate just starting now in April and he will continue up to the first quarter of next year.
Okay.
Okay and that is that the lead and zinc and already in 'twenty. Two 'twenty three guidance you gave us in your pre release, so I should think about that lab in zinc whatever that guidance has to be now so from Q2 and up to year end.
That's correct that's correct.
Okay that makes sense to me. Thank you so much I really appreciate you taking my questions and thank you.
Thank you Sanjay.
Once again, if you would like to ask a question. Please press star and one to withdraw your questions you May press star and two.
Our next question is a follow up from Carlos de Alba from Morgan Stanley . Please go ahead with your question.
Yeah. Thank you I just jumped back if I may ask.
What would what do you guys stand in terms of the permits.
And why do you sort of the deadline.
The deadline that you internally have to receive these parameters that you'd be able to ramp up the operations.
In the fourth quarter or or or.
Or start ramping up and they're embracing their fourth quarter or later this year.
Got it.
Me.
A few which permits in Europe are doomed, but chaco.
Chocolate Jaguar Jaguar.
Okay. Okay.
Well.
Maybe I'll hand, it all well where we are.
And in in <unk> in line, what we have.
Yeah.
Well talk.
So Glenn explained to the market we are in line with our guidance that however, Alejandro can give you.
The retail.
Which will be the.
The timeframe.
In order to.
And when you start to attack.
And begin.
Please go ahead Alejandro.
Yes.
Thank you cards okay.
We have two different sufficient to chartwell has no major issues in terms of permits we just have to.
Uh huh.
On due time do the procedures to restart the operation. So that's not a major issue on the jumbo side, what we have we're in the final stage of getting the approval for the Emperor.
Settlement study that the main environmental.
Yeah.
Yeah permit that.
We should be able to get that approval, we should've gotten already but we should get it by me within me, we should get that approval after that.
We need to.
Go into the.
Minister of mines to get the construction permits.
And it should.
Take us a few months.
It's a few months more is just an issue of bringing all.
All the parts together.
And we.
We should have that permit for the first phase of the projects.
Yeah that would be by the.
On time as it was scheduled.
Okay, and sorry, just what when would you expect to get the the construction permit for your impact.
Juan Carlos.
Yes, we expect to have the <unk>.
We're really are developing the mine Carlos we are running.
We're running the ramps running the actresses.
We the license that we expect to have in May four six weeks down the road, we would start to develop the ore body.
May will start hitting your body and they are making January through their bodies here, maybe high grade areas.
20 to 25 ounces of silver.
So we'll start developing that.
In order to transport the ore.
From the from the <unk>.
Area, where scale matters.
But also if you blend those Chuck what will be the an additional permit which they need to have it by the end of this year it doesn't twenty-three or the first quarter 2024.
What we are doing our best to try to speed it up and try to get the permit by the last quarter.
So easy to put these 23 25 ounces of silver.
Our balance sheet by the end of the year.
That's <unk> and in parallel we are doing some develop these new developments underground. He would you chunghwa mine to access new areas that we have discovered in the last 12 months 18 months.
There are different blend of celebrity latency more now into the <unk>.
Probably be seeing.
Late.
Super so multiple metallic or good value and probably we will start.
We are doing now the developing of these stopes.
We are producing more stockpiles of coal so far and we expect to start the production of the processing plenty to chunghwa.
So pretty.
Pretty much the two operations June bank, Chuck well by the end of the year, we Sir.
Turning to production.
Alright, and just one kind of just to clarify that.
The construction permit.
Can you impact that you see them.
Our need is really just for the transportation of the ore to the shekel plant.
Yeah.
Is it actually because we have all the permits for the mine developed band for the comps for the power line for the access road. Some go.
<unk> multi zone.
That's very transportation between the June back.
Site to the processing plant of could you talk about good numbers along the highway we need to get an additional permit and also for processing commercialization of the concentrate that we produce.
So that's the final Bermuda, we will acquire efficient production.
Okay. Thank you.
Carlos Let me add.
That we are more positive.
Government attitude.
Sure.
For the meeting.
We think the coffee identify that need.
We are aggressively the difficulties in mining industries facing these days and they are.
Tom O N.
In bold and very worried then there Brian .
You bet.
Two.
Accelerate all the permitting so we are very optimistic that we are going to.
We granted all the burden.
Need to continue the operations.
At which time collaboration with Sun and <unk>.
Okay.
Thank you.
And ladies and gentlemen that will conclude today's question and answer session I'd now like to turn the floor back over to Mr. Garcia for closing remarks.
Thank you. Thank you for attending.
This conference call.
We have to mention that yesterday we.
We have hours.
Seventh anniversary.
As a companion.
In Florida, and we are very proud.
<unk> be part of this family and.
And we are.
Two of them.
Go farther with our efforts to you.
I mean, all of our projects in all of our work for our company for our.
Collaborated Roseborough, we're going to thank you very much.
A good day.
Ladies and gentlemen that will conclude.
Planar Ventura is first quarter 2023 earnings results conference call, we'd like to thank you again for your participation you may now disconnect your lines.