Q2 2026 Compania de Minas Buenaventura SAA Earnings Call

Speaker #1: Good day and welcome to the COMPANIA DE MINAS BUENAVENTURA second quarter 2026 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone.

Speaker #1: To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Sebastian Valencia. Please go ahead.

Speaker #2: Good morning, everyone. Thank you for joining us today to discuss our second quarter 2026 results. Today's discussion will be led by Mr. Leandro Arcea, Chief Executive Officer, also joining our call today and available for your questions are Mr. Daniel Dominguez, Chief Financial Officer, Mr. Juan Carlos Ortiz, Vice President of Operations, Mr. Aldo Maza, Vice President of Business Development and Commercial, Mr. Renzo Majer, Vice President of Projects, Mr. Juan Carlos Salazar, Vice President of Geology and Explorations, Mr. José Malga, Vice President of Sustainability.

Speaker #2: Mr. Roque Benavidez, Chairman, and Mr. Raúl Benavidez, Director. Before I hand the call over, please let me touch first on a few items. On Buenaventura's website, you will find our press release that was posted yesterday after the market close.

Speaker #2: Please note that today's remarks include forward-looking statements that are based on management's current views and assumptions. While management believes that assumptions, expectations, and projections are reasonable in view of currently available information, we are cautious not to place undue reliance on these forward-looking statements.

Speaker #2: I encourage you to read the full disclosure concerning forward-looking statements within the earnings results press release issued on July 30, 2026. Let me now turn the call over to Mr. Leandro Arcea.

Speaker #3: Thank you, Sebastian. Good morning to all, and thank you for joining us today to discuss the quarterly results of the company. On slide 2 is our cautionary statement, important information that I encourage you to read.

Speaker #3: Today, we will talk about our second quarter 2026 performance, our main achievements, and our priorities for the future. After the presentation, we will have a Q&A session where our team will be happy to answer your questions.

Speaker #3: Next slide. I would like to begin with a brief overview of our operational performance during the second quarter of 2026. Consolidated gold production increased 12% year over year to 30.5 thousand ounces, primarily driven by the continued ramp-up of TAT San Gabriel.

Speaker #3: Consolidated silver production increased 2% year over year to 3.6 million ounces, mainly supported by higher production at Yumpag, while copper production increased 2% year over year to 13.5 thousand tons, reflecting stable production at El Brocal.

Speaker #3: San Gabriel produced 2.8 thousand ounces of gold during the quarter, and began commercialization in the second quarter of 2026. Marking its first contribution to Buenaventura's sales volumes.

Speaker #3: More details on the project's ramp-up and key developments are presented in the following slides. In addition, after quarter-end, we received approval to increase Yunpak's mining throughput from 1,000 tons per day to 1,200 tons per day, an important milestone toward unlocking additional production capacity.

Speaker #3: Our capital allocation remains focused on projects and assets that enhance productivity, support growth, and create long-term value for shareholders. CAPEX totaled approximately $98 million.

Speaker #3: Primarily allocated to San Gabriel, El Brocal, and Uchucchacua Yunpak, supporting productivity, operational reliability, and future value creation. Moving on the next slide, I would like to summarize our second quarter financial performance.

Speaker #3: Our operational performance, combined with the favorable metal prices, translated into another quarter of strong financial results. Total revenues increased 43% year over year to $529 million.

Speaker #3: EBITDA from direct operations reached $277 million, increasing 113% compared to the same period last year. Importantly, EBITDA margins expanded from 35% to 52%. Net income reached $261 million, representing a 165% increase year over year and reflecting stronger operational performance across our core assets.

Speaker #3: Our balance sheet remains a key strength of the company. We closed the quarter with 759 million dollars in cash and 692 million in total debt, maintaining a net cash position of approximately 67 million dollars.

Speaker #3: Net debt to EBITDA remained at negative 0.05 times, underscoring the financial flexibility of the company. Advanza, our power generation subsidiary, we reduced the outstanding balance of the financial list from 63 million dollars to 50 million dollars, with the remaining balance to be amortized through 2031.

Speaker #3: Year to date, dividends from Cerro Verde reached $274 million, including $118 million received in July. Moving on to cost applicable to sales trends, starting with copper, cash performance remained stable year over year, mainly at El Brocal.

Speaker #3: Silver cash increased compared to the same period last year, primarily reflecting higher commercial deductions associated with price-based escalators at Uchucchacua and Yunpak. And finally, gold cash was impacted by the commencement of commercial sales at San Gabriel, during the quarter the operation recorded cost applicable to sales for the first time as it continued progressing through its ramp-up phase.

Speaker #3: As production and sales volumes remained below expected steady state levels, current unit costs are not yet representative of the operations' long-term cost profile. Next slide, please.

Speaker #3: As mentioned earlier, San Gabriel continued progressing through its ramp-up phase during the second quarter. While throughput remained constrained by tailings management and filtration challenges, the operation continued advancing across all key areas of development, and we remained focused on achieving a stable and sustainable ramp-up.

Speaker #3: At the mine, we have completed the primary ventilation infrastructure and continue advancing the development of the full mining fleet, which will support future production growth.

Speaker #3: At the same time, we expect to begin undercut mining below the cemented field during the third quarter, representing another important operational milestone. Within the processing plant, our priority remains stabilizing throughput and improving operating performance.

Speaker #3: Current efforts are focused on moisture control, filtration performance, and metallurgical optimization, with recoveries expected to continue improving during the second half of the year.

Speaker #3: On the tailings slide, on the tailing site, we expect filtered tailings compaction to begin during the third quarter, while ongoing expansion works are designed to progressively support higher throughput levels as the operation advances toward steady-state conditions.

Speaker #3: On the next slide, we highlight our strong free cash flow generation. The second quarter of 2026. Solid operation performance supported by dividends received allowed us to close the quarter with a cash position of 759 million dollars.

Speaker #3: The chart also reflects the dividend payment we made in May. Importantly, this balance does not yet reflect the $118 million dividend received from Cerro Verde in July following the quarter end.

Speaker #3: Before opening the line for questions, I would like to leave you with four key messages. First, San Gabriel continued advancing through its ramp-up phase during the quarter. The operation began recording commercial sales in the second quarter of 2026, and is now starting to contribute to Buenaventura's results.

Speaker #3: While we continue working through the challenges inherent to any ramp-up process, our focus remains on achieving stable and efficient operations that will become an increasingly important contributor to the company's growth.

Speaker #3: Second, we continue executing our growth strategy across the portfolio. A key milestone was achieved at Yunpak, where we received approval to increase the mining rate from 1,000 tons per day to 1,200 tons per day.

Speaker #3: This represents the first step toward unlocking the operation's full potential, while we continue advancing the next phase of expansion. Third, exploration remains part of our DNA.

Speaker #3: As we continue unlocking growth opportunity across our portfolio, we remain committed to extend our life of mine and supporting the long-term sustainability of our production growth.

Speaker #3: We believe that growing production and replenishing resources must go hand in hand to ensure long-term value creation. Finally, the combination of strong operating performance, disciplined capital allocation, and a favorable commodity price environment continues to strengthen our cash generation and balance sheet.

Speaker #3: This financial strength give us the flexibility to invest in our growth portfolio execute our long-term strategy and continue delivering value to shareholders through our dividend policy.

Speaker #3: Thank you for your continued interest and support. We appreciate your time today, and we look forward to answering your questions. Operator, please go ahead.

Speaker #1: We will now begin the question and answer session. To ask a question, you may press star, then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker #1: If at any time your question has been addressed and you would like to withdraw the question, please press star, then two. At this time, we will pause momentarily to assemble our roster.

Speaker #1: Our first question comes from Tanya Jakuschuknech from Scotiabank. Please go ahead.

Speaker #2: Oh, great, Ted. Good morning, everybody. Thank you for taking my questions. I have four questions, if I could. I'm going to start with San Gabriel first.

Speaker #2: Maybe someone can just provide me some insights into how the mining and the processing are doing relative to your block model now that you've gone commercial, and also in the underground and in the processing facility, what do you still need to do to optimize any I saw the recoveries need to be optimized, but anything else to get you to that steady

Speaker #3: Thank you, Tanja, for your question. We, as I told you before, we are very focused on San Gabriel. We have a plan to deliver the what we what was our guideline for 2026, and ending the ramp-up in the middle in the midst of 2027.

Speaker #3: Maybe Juan Carlos can give you more color on this topic, please. Juan Carlos?

Speaker #4: Sure, Leandro. Tanja, regarding the mine, the underground mine, we're feeling comfortable with the product that we have in the new mining method, the undercut and field.

Speaker #4: We are already in the first undercut. You know, we need the original mining layer with cemented backfill, so we are doing okay according to the plan.

Speaker #4: We are ramping up production, we are opening new phases, and now we are according to the plan. So the underground mine is moving ahead; it's according to our plans.

Speaker #4: We will have the fourth fleet for underground mining for Buenaventura. By the end of August, and two additional fleets for future developments underground with a contractor by November, according to the plan.

Speaker #4: So, the underground mine is moving along. Regarding the processing plant, we have two lines of work: one is related to increasing throughput, and the second is increasing recovery.

Speaker #4: Regarding the throughput, we are facing some problems with the press filters. Remember that we are using dry stacking for tailings disposition, so we need to filter all the tailings.

Speaker #4: We are having some problems with the structural basis of the foundation of the filters. Remember, these are high-pressure filters, so when they are loaded with full pressure, they start to generate a back movement in the structures. And according to the tolerance that we have to have in these structures, we are on top of that—beyond that.

Speaker #4: So we need to do further works to reinforce the structure. Put some additional steel and reinforce with new structures, additional structure on top of what we have in the building.

Speaker #4: We have three filters, so we need to do one by one, to reinforce the filters. Once this tasks are committed, we are on track to reach full capacity from that processing plant.

Speaker #4: Regarding the recoveries, cold recoveries, it's a very complex ore. We are following all the parameters that we do have. We need to fine-tune our set points for all of them.

Speaker #4: And put and use additional reagents. We have some pre-carbon coal in the ore, generating a lot of trouble. So we need to add additional reagents, new reagents that we don't have in Peru.

Speaker #4: So we are bringing these reagents in August to start testing it at industrial scale. We already tested them at a lab scale. They are giving good results.

Speaker #4: They are part of the solution. Probably in August, we will start finding the right dosage of these reagents for reducing the impact of the pre-crowding that we are already facing in the second quarter.

Speaker #4: With that, we expect to reach about 70% gold recovery by the end of 2026. The following actions to go beyond 70% gold recovery are probably linked with an additional sequence for flotation.

Speaker #4: Probably, we need to remove all the coal—all the organic matter that we have in the ore—not only use the reagent that I mentioned at the beginning of my comments, but probably we need to remove that coal in order to avoid further complications in the process.

Speaker #4: So, the flotation circuit is being designed. We probably need to get all the permits and all the designs ready by the end of the year, and implement this new flotation circuit for coal and partial sulfides, refractory sulfides, by the end of 2027.

Speaker #4: So there are two milestones. The first one reaching 70% gold recovery by the end of 2026. And beyond that 70%, close to the 85% that we have in our budget, probably by the end of 2027.

Speaker #2: Okay. And just so I understand, the issue that you're having with the recoveries has to do with organic matter that's sitting with the gold?

Speaker #4: Yes. It's organic matter. And there is a small fraction of the gold that is into the sulfites. It's becoming a little bit harder to extract that gold out of the sulfites.

Speaker #4: So we believe the best option is to do a complete flotation, not only for the organic matter, coal, and everything, but in addition to that, the flotation of the sulfite as well.

Speaker #2: Okay, so it's two things. It's both the sulfites and organic matter. Okay, thank you for that one. And then the second question I have is just on the costs overall.

Speaker #2: Besides the inflationary pressures you are seeing from higher fuel prices, and maybe royalties paid, are you seeing any other inflation in terms of labor or any other consumables, or any issues with the supply chain in what you need for your costs?

Speaker #3: No, Tanja, this is Daniel. We don't see, or we don't foresee at this point in time, any major inflation effects, as we were speaking last quarter.

Speaker #3: The impact of higher diesel prices had an effect of around 5% on our OPEX. Probably, having diesel at the same levels as last quarter, the impact could be around 5% to 7%.

Speaker #3: Also, as you mentioned, the workers' profit sharing is also slightly increasing our costs, but nothing else. We don't have energy issues. Other reagents or consumables are keeping the same price for Buenaventura, at least.

Speaker #2: Okay, Daniel, thank you for that. That's good to see. And I guess while I have you on, what about expectations for dividends from Sierra Verde for 2026 and the longer term?

Speaker #2: I mean, we're doing above the guidance range you provided. So what would you guide for us for Sierra Verde dividends?

Speaker #3: Well, for the first half of this year, Sierra Verde has already distributed close to 160 million. They have already reported another 120 million. This is for Buenaventura stakes.

Speaker #3: They have already reported $120 million of dividends that will be or have already been paid in July. So this adds up to around $274 million.

Speaker #3: We expect between $50 million to $100 million in addition to this, by the third or by the fourth quarter. So in total, we should be receiving between $350 million and $380 million of total dividends for this year.

Speaker #2: Daniel, should I be thinking similar level for next year?

Speaker #3: Probably.

Speaker #4: Price.

Speaker #3: Yes, depending on the price, it could be $50 million or $80 million less. Remember that the dividend we received in January was a dividend that came from the previous year.

Speaker #2: Yeah. So maybe 300 million.

Speaker #3: Yes, which is higher than what we have been receiving.

Speaker #2: Oh, absolutely. That's great. Thank you so much for taking my questions.

Speaker #4: Yes.

Speaker #1: Our next question comes from Carlos de Alba. With Morgan Stanley. Please go ahead.

Speaker #5: Yeah. Thank you. Good morning, everyone. Good to be here. Just in terms of all the initiatives that you are pursuing in San Gabriel to address the challenges, what are the capex and opex implications?

Speaker #5: How much capex are you investing in those initiatives? And is cost going up? And if you can, maybe just remind us what are the capex expectations for this year, maybe next year, and then what is the cost looking like, the opex for San Gabriel once you stabilize the operation?

Speaker #4: Sure. Carlos, the total capex, we expect to spend this year is around 500 million dollars. We already have expended in the first half around 200, 220.

Speaker #4: All the investments we have to make in San Gabriel, Brocal, and all our flagships are according to what we expected in the guidelines.

Speaker #4: And mainly, these are also related to opportunities that we have found by taking advantage of prices, which give us opportunities to do the capex or keep the capex for next year.

Speaker #4: We can go forward a little bit. Another type of capex that we are identifying is how we are going to prepare for the El Niño phenomenon.

Speaker #4: So we that will be the guideline for this year. In terms of especially the capex for San Gabriel, it's around the rest of the year is around 60 million dollars around that number.

Speaker #4: I don't know, Juan Carlos, if you want to give us some more ideas.

Speaker #5: Yes. Yes, Leandro. In the case of San Gabriel, all the comment that I made regarding the increase in recovery for 2026 has not material in regard of opex and capex.

Speaker #5: These are more on the fine-tuning of the existing infrastructure and using additional reagents that replace other reagents that we have used before. In the case of the increase in throughput, as I mentioned, we need to reinforce the structures that hold the three filters—press filter for tailings. We are working on the engineering for these reinforcements.

Speaker #5: Off the top of my head, I would say something between $5 million to $10 million. But we probably need to do the engineering, and it will probably be in the lower range.

Speaker #5: But it's something that we need to still work on. To have something that really solve the problem, but at the same time, it's a fast to be implemented and with the existing constraint because the filters are already mounted on their basis.

Speaker #5: So, Juan Carlos, it's basically a small impact on capex, but not a real impact on opex.

Speaker #4: No, we will probably follow our budget for opex for the year. Of course, the impact will be a lower throughput than expected. That will impact the cost per ton.

Speaker #4: But not the overall amount of dollars that we spend along the year.

Speaker #5: And what will be the cost of adding the additional flotation circuit?

Speaker #4: We haven't finished the engineering so far. We expect it to be in the order of $15 million, probably for next year.

Speaker #5: Sorry, 50 or 15?

Speaker #4: 15. 15.

Speaker #5: And that does not increase the cost significantly, the opex cost? The additional circuit.

Speaker #4: No, maybe $1 or $2 per ton out of 130, so it's not material—maybe a 1% increase in cost to capture 10% more on recovery.

Speaker #5: Right. Okay. Yeah. So you will be getting closer to 80% recovery. Okay. Okay. All right. And then on Cerro Verde, great to see the capex coming through.

Speaker #5: Just on production, what is the expected copper production this year and next in Cerro Verde?

Speaker #4: It has not changed. It's the same guidance. It's a little lower than the prior year, but it has not been any change in the guidelines.

Speaker #4: Let me—allow me. Leandro, the production for the first six months of 2026 is about 187,000 tons for fine copper—187. Probably, it's a very steady operation.

Speaker #4: Probably we can expect the same production for the remaining six months of 2026. So it's going to be around 370, 380,000 tons of copper for 2006.

Speaker #5: Okay. Thank you. And you will be getting and what will be the will the percentage of the Cerro Verde production that you're getting change in the coming quarters?

Speaker #4: No, no. We have a contract for 40,000 tons of concentrate.

Speaker #5: Okay. All right. Then on Julcani, there was a big shift in the production mix between gold and silver. What is the outlook for the remainder of the year?

Speaker #5: And I don't know if you have a view on 2027.

Speaker #4: After the mortar action, we have changed where we are concentrating to another area of production. That is the reason why the production of silver is lower, a little bit, from our guideline.

Speaker #4: However, the gold increase is for the new areas we are working. As you know, we are in a process that, in this quarter, we expect to have some news on whether we have arrived at a final decision to sell Julcani.

Speaker #4: And we have the plan until 2026. However, once we end this process, we will see if we continue; we can give you the guideline for the 2027 year.

Speaker #5: Okay. All right. But for the second half of 2026, this mix of gold and silver should remain stable or the mining plan suggests something different?

Speaker #4: No, we continue with the same, in the same areas. Yes.

Speaker #5: Okay. All right. And then, finally, on Uchucchacua and Yumpag, there was a significant increase—almost double—and it is mentioned there that it was driven by price-based escalators.

Speaker #5: So as silver has come down, how do you see cast adjusting it back down? Just if you can share any colors, given the importance of that operation, and the big increase in cast that we saw in the second quarter.

Speaker #4: Well, as I understand, the base escalator—the price that we use as a base for the contracts for this part of the year, the first six months—was around $35.

Speaker #4: For the new contracts, I think we are fixing that base in 50 dollars. I don't know. Although maybe can give you more information.

Speaker #5: Yes, Leandro. You are right. For the first half of the year, we have this floor price of 35 dollars per ounce. And these contracts are going to end in August this year.

Speaker #5: And from September to December, we're going to start with a new base of $50 per ounce. Okay. All right. Thank you.

Speaker #2: Again, if you have a question, please press star, then one. Our next question comes from Cesar Perez Novela with BTG. Please go ahead.

Speaker #5: Yes, good morning. My first question relates to Yumpag. You received approval to increase your throughput rates by 20%. My question is: How is this expected to impact silver production going forward?

Speaker #5: And could you actually quantify this potential increase and discuss whether this scale-up might affect or improve the cost structure of this asset?

Speaker #4: Yes, Cesar. Taking into consideration that we received it halfway through the year, we are now ready to begin production at 1,200 tons per day.

Speaker #4: We expect about a 10% increase over what we were thinking at the beginning of the year, no?

Speaker #5: Okay. Okay. And is this going to have, Leandro, any impact or improvement on the cost structure for this mine?

Speaker #4: Perfect. Yeah, sure. Juan Carlos, please.

Speaker #3: Yes. You're going to have a positive impact. We dilute our fixed cost by 20%, but in addition to that, by the fourth quarter of this year, we are connecting the Yumpag operation with the national electrical grid.

Speaker #3: So, we replace all the power generated by electricity with cheaper electricity. So, the outcome by the end of the year is going to have a double effect.

Speaker #3: The effect of larger throughput and the replacement of energy coming from generators—diesel generators—by electricity coming from the national grid. So it's going to be a cost reduction in the order of 15 to 17 percent, lower than the operating cost of the initial, the first half of the year.

Speaker #5: All right. Thank you very much. Can you also assess the current progress on the Trapiche copper greenfield, given how high copper prices are? The cash flow that you're generating—the substantial dividends you're getting from Cerro Verde.

Speaker #5: Is there any scope to accelerate the development timeline?

Speaker #4: Thank you, Cesar, for this question. Here with us is Renzo Maher. He can give you an idea of what we have going on in Trapiche.

Speaker #4: Please, Renzo, go ahead.

Speaker #6: Yes. Thanks. And thanks for the question. Yes. Actually, due to this increasing copper prices, the opportunity of exploiting the primaries, which is which are currently open underneath the secondary sulfites, it becomes getting closer to our realities.

Speaker #6: So, we are going to be spending the next year, year and a half, in understanding if it's a business, and meanwhile we're going to keep reducing the current risk of the project, which is the access road, the power line, the licenses, and try to get a better, a deeper dip into the acid consumption.

Speaker #5: All right. And this is my last question. Has El Niño had any operational impact to date, or do you have any concerns about future effects?

Speaker #5: If so, which mining areas, operations, or logistics do you see at most risk—if any, of course?

Speaker #4: Yes, Cesar. Thank you for your question again. We are identifying some risks in our risk management meetings. We have looked at all our main operations and what the effects will be.

Speaker #4: Part of the increase—a little increase—in CAPEX is related and is added to what we thought at the beginning of the year.

Speaker #4: We are going to spend in that, so we have added additional CAPEX of around $12 million. Maybe Juan Carlos can give the exact idea and explain what activities we are undertaking and what we are preventing.

Speaker #5: Sure, Leandro. Since the end of April, when we had the early alert of El Niño—a strong El Niño in Peru—we began working with our safety committees to prevent any potential damage from this impact, such as heavy rains.

Speaker #5: So we already put a committee in each of the mines. Each of the mines have mapped all the potential risks that we have, and we authorized an increasing CAPEX of about $12 million to be spent in the rest of the year 2026 in order to be prepared for larger rainfall.

Speaker #5: Increase pumping capacity, power for the pumps, water treatment facilities, and reinforcement of certain critical structures like water dams or reservoirs, so we are working in that regard.

Speaker #5: We have a very strong technical committee working in that regard. So far, we haven't had any damage like, probably, you heard the news about the damage from heavy rainfall in Chile.

Speaker #5: We don't have that in Peru, but we are preparing for probably a strong rainfall in the next rainy season, starting in December 2026. All right.

Speaker #5: That's fairly detailed. Thank you very much, all of you. Thank you.

Speaker #2: This concludes the audio portion of the Q&A session. I'd like to turn it over to Sebastian Valencia for webcast questions.

Speaker #5: Thank you, operator. The last question concerning your act, Dominique. From Larraín Vial. Given the recent price drop in gold, any risk that productioning or the Mamayo could be review?

Speaker #4: Well, I think that my first answer is no. We are permanently reviewing the value. We add that with any ounce we produce, but we are building a plan for Coampa and Mayo for the following years.

Speaker #4: We continue in that trend.

Speaker #5: Thank you, Leandro. At this time, there are no further questions. I would like to turn the call over to Leandro for final remarks.

Speaker #4: Okay, thank you, Sebastian. Before we conclude today's conference call, I would like to thank you for the time and effort dedicated to joining us today.

Speaker #4: Your participation and input are greatly appreciated. Thank you again, and have a wonderful day.