Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) Q2 2025 Earnings Call Transcript

Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) Q2 2025 Earnings Call Transcript July 25, 2025

Operator: Good morning, ladies and gentlemen. Welcome to the Compañía de Minas Buenaventura Second Quarter 2025 Earnings Results Conference Call. [Operator Instructions] And please note that this call is being recorded. I would now like to introduce your host for today’s call, Mr. Sebastian Valencia, Head of Investor Relations. Mr. Valencia, you may begin.

Sebastian Valencia Carrasco: Good morning, everyone, and thank you for joining us today to discuss our second quarter 2025 results. Today’s discussion will be led by Mr. Leandro Garcia, 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 Massa, Vice President of Business Development and Commercial; Mr. Alejandro Hermoza, Vice President of Sustainability; Mr. Renzo Macher, Vice President of Projects; Mr. Juan Carlos Salazar, Vice President of Geology and Explorations; and Mr. Raul Benavides, Director. Before I hand the call over, let me second touch on a few items. On Buenaventura’s website, you will find our press release that was posted yesterday after the market close.

Please note that today’s remarks include forward-looking statements that are based on management’s current views and assumptions. While management believes that its assumptions, expectations and projections are reasonable in 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 the forward-looking statements within the earnings results press release issued on July 24, 2025. Let me now turn the call over to Mr. Leandro Garcia.

Leandro Luis Martin Garcia Raggio: 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. Today, we will be discussing our performance for the second quarter of 2025, highlighting key achievements and strategies moving forward. After the presentation, we will be able for our Q&A session, where our team will be happy and eager to answer your questions. Continuing with the next slide, please. I would like to highlight a few key areas that contribute to our strong second quarter 2025 results. Our EBITDA in the second quarter 2025 from direct operations was $130 million compared to $107 million reported in the second quarter of 2024.

Our net income in the second quarter of 2025 was $91 million compared to the $71 million in the net income — in the second quarter of 2024. In the second quarter of 2025, silver production reached 3.6 million ounces, 11% lower compared to the 4 million ounces produced during the same period in last year, mainly due to lower production at Yumpag, Tambomayo and Julcani. Copper production increased 28% year-over-year, primarily due to halted operation at El Brocal in the second quarter of 2024, and it was related to the impact on copper ore processing during the period. Gold production was 27,345 ounces compared to 33,819 ounces produced in the second quarter of 2024, primarily due to decreased production at Tambomayo and Orcopampa and partially offset by the increased production at La Zanja and El Brocal.

In the second quarter 2025, Buenaventura initiated the sale of part of the Cerro Verde’s copper concentrate. Approximately 20,000 metric tonnes have been sold by the quarter’s end, out of a total of approximately 40,000 metric tonnes expected for the full year 2025. Cerro Verde announced a new dividend distribution of $59 million on July 24, corresponding to Buenaventura’s equity share. These dividends will be distributed in August, resulting in a total of $108 million. The total CapEx for the quarter amounted to $107 million, with $82 million allocated to the San Gabriel project. The second quarter ended with a cash position of $589 million and a total debt of $860 million, resulting in a leverage ratio of 0.56x. Finally, on July 23, Buenaventura redeemed the remaining $149 million of its 2026 bond.

Moving on to our cost structure in Slide 4. The all-in sustaining cost expressed in terms of copper for the second quarter of 2025, increased by 63% compared to the same period in the previous year. It is important to highlight that year-over-year increase in all-in sustaining cost was primarily driven by lower by-product credit. Moving on to the cost applicable to sales trend. As you can see, copper cash increased mainly due to slightly lower grades. Silver cash increased in line with the expectations due to lower production at Julcani, Tambomayo and Yumpag compared to the previous year. Gold cash has increased, primarily driven by lower volumes and rates at Tambomayo and Orcopampa. On the next slide, we will present the free cash flow generation.

The second quarter 2025 cash position decreased during the quarter, mainly driven by net cash outflows from investing activities and dividends paid to our shareholders. The $49 million in dividends received from Cerro Verde are reflected in the operating cash flow. This dividend was received in April. In addition to these drivers, the EBITDA, the free cash flow reconciliation reflects Buenaventura’s significant CapEx investments related to San Gabriel. Moving on to Slide 6. This slide shows San Gabriel cumulative progress reaching 88% overall completion by the second quarter of 2025, primarily driven by finishing the engineering and the procurement as well as the construction — is at 86% of advance. Second quarter 2025 CapEx related to San Gabriel was $82 million.

As of March 2025 San Gabriel’s — as of June, sorry, 2025, San Gabriel’s total CapEx has reached $588 million. We anticipate commencing the ramp-up pace in the third quarter of 2025, followed by the production of the first gold bar in the fourth quarter of 2025. However, these milestones remain subject to the timely approval to the necessary permits. On the next slide, we are showing the processing plants progress. Currently, the primary crusher mechanical works are at 100%. The SAG and Ball mills mechanical works are at 100% also. And finally, the CIL tanks mechanical works are at 98%. Moving on, we can see the progress of the main components of the plant. Moving on to Slide 9. We are showing the progress at the filtered tailings plant that currently is at 87%.

To conclude the presentation, I would like to share a few final thoughts. First, we are committed to our strategy. A stable and continuous production at our flagships. We are making programs with optimization efforts to increase throughput and are continuously evaluating our operating portfolio. Exploration is part of our DNA. We are fully committed to extending the life of mine of our assets through continuous exploration effort. Third, we maintain our financial stability. Consistent with our commitment to the market, we redeemed the remaining 2026 notes. And finally, San Gabriel project achieved a 88% overall progress. Meeting our planned targets, we remain on schedule to deliver our first gold bar by the fourth quarter of 2025. Thank you for your attention, and I will hand the call back to the operator to open the line for questions.

Operator, please go ahead.

Q&A Session

Operator: [Operator Instructions] And the first question comes from the line of Carlos De Alba with Morgan Stanley.

Carlos De Alba: A few questions on San Gabriel. First one is can you provide a little bit more color on the pending permits? And where are you in the process? I mean, we’re already in the third quarter. Have you had any conversations with the authorities? Do you believe you’re going to get them on time to have the first bar produced in the fourth quarter? So yes, more details would really help. The second point on question on San Gabriel is, just on CapEx, how much more investment is required in the second half of 2025? And what is the expected, if any, disbursement in 2026? And then finally, can you comment on the pace of the expected ramp-up with first metal hopefully being produced in the fourth quarter? When do you expect to get to full capacity?

Leandro Luis Martin Garcia Raggio: Thank you, Carlos. Thank you for your questions. For the first — the question asking for — your question asking for the permit, we actually have invited the authorities to visit the plant around September. We are going in advance with this because there is only a very simple permit that is the actual permit to begin the throughput, the production there. We don’t foresee a greater risk in that permit. We have to consider that for the countries the only project that is going to be beginning production will be inaugurated in this year. And I think it is important to show that good news for the country. In terms of CapEx, maybe — it’s — the total CapEx, we are still in the same level we announced in our last conference.

We have not increased any additional CapEx. It will end around $720 million and $750 million. And maybe, Daniel, will give you more color on that. And finally, the ramp-up will take all the 2026, and we should stabilize after the ramp up in the production. We have announced that we’ll be between 100,000 ounces and 120,000 ounces. I don’t know, Daniel, if you can take the answer.

Daniel Dominguez Vera: Yes, Leandro, thank you. Carlos, basically, the total amount of the CapEx for San Gabriel will be in the order of $720 million to $750 millioin. And we have already disbursed close to $600 million as of June 2025. So what we expect is to disburse between $130 million and $160 million for the construction as the end of the year.

Leandro Luis Martin Garcia Raggio: Maybe, Juan Carlos Ortiz can give us more color or more ideas around — about the ramp-up that you asked, Carlos.

Juan Carlos Ortiz Zevallos: Carlos, yes. We are planning the detailed ramp-up in connection with the mine, the processing plant and the dry stacking facility for holding the tailings. The mine is running okay. We have most of the equipment on the underground of — underground already in Peru. We have 2 out of 4 fleets already delivered to the site. And we will complete the fleet by Epiroc by November. So we are okay with the production and mine development. The processing plant is progressing. You see in Leandro’s presentation how it’s progressing. But in October, we will start the wet commissioning with slurry. So it’s part of the process. Any natural project will lead to pass these steps. So we don’t anticipate any major problems, but no more than the usual ones to run a new facility of this process, kind of processing.

Next year, after the wet season in Peru, the wet season is between January to March, April. We will assert the activity of filtering and drying the tailings and placing these tailings in horizontal layers inside the tailings reservoir, the dry stacking. Probably that’s the activity that we will need to put a lot of emphasis because it’s something new for San Gabriel. It took a while, a few months to fine tune this process in Tambomayo. So probably we need to be more cautious and more conservative about the amount of tailings that we can dry and compact in the dry stacking facility, particularly because it’s a V-shaped valley. So we need to start from the bottom of the valley. So the area — the available area at the bottom is smaller. So it’s going to be tricky to start ramping up production at the bottom of the valley.

So we are taking care of the commissioning and the detail for the initial ramp-up of San Gabriel operation.

Carlos De Alba: Just one follow-up maybe on that. When — have you started mining already? Or when do you expect to start mining? Would you accumulate some inventories ahead of starting the plant?

Juan Carlos Ortiz Zevallos: Yes. We already have around 100,000 tonnes of ore in the surface of about 3 grams. That will be the first material to be fed into the processing plant for the commissioning — wet commissioning process. We already have in the order of 100,000 tonnes of ore in surface, right next to the processing plant.

Operator: [Operator Instructions] And your next question today will come from Cesar Perez-Novoa with BTG Pactual.

Cesar Perez-Novoa: Yes. And congratulations for your results. I have 2 questions on my end at Uchucchacua, while silver production increased in the quarter, the mine encountered a decrease in silver grades as it shifted extraction towards polymetallic stops. Has this already stabilized in the third quarter? Or are we going to see some shift later in the year towards bottom level stops? And would it be reasonable to assume that, that cost will improve in the second half? And then my second question relates to El Brocal. The company mined higher ore in the second quarter. Is this strategically continuing for the rest of the year, conditioning, of course, on high copper prices? And how should we think about cost? And maybe you could tie that up with the commercialization of the Cerro Verde concentrate? And if that is improving the overall for your entire copper baskets. Those would be my questions.

Leandro Luis Martin Garcia Raggio: Thank you, Cesar. Thank you very much for your questions. Well, the answer for El Brocal can be given by — from Carlos. And the part of the commercialization of the concentrates, maybe Aldo can give us more color. Please, Juan Carlos.

Juan Carlos Ortiz Zevallos: Regarding Uchucchacua, as we mentioned in the comments of Uchucchacua in the quarter, we detect — we have a monitoring system for seismic events in the mine. So we detect some seismic activity near our current operation area at the bottom of the mine. So we will be cautious about that. So we took all the people out of the area. We bring a consultant people on board to analyze all the data, and they recommend to do some additional backfilling, particularly with wet tailings, ancillary tailings backfilling. So we’re bringing all the pipelines, extend the network of pipelines to bring the wet tailings down to the bottom of the mine. That will be done in this quarter, the third quarter. And we will monitor what the effect of this backfilling in that area by the fourth quarter.

If everything is stable, we will resume mining in the bottom part of the mine by the fourth quarter. It’s important to mention that the bottom part of the mine only contribute with around 20% of the total production of Uchucchacua. So it’s not a very sensitive area. It’s a high grade, but it’s kind of a small in proportion to the rest of the mine. We will continue ramping up production in other areas of Uchucchacua. So we expect to reach 2,000 tonnes per day throughput by the end of the year. Right now, we are close to 1,700 tonnes per day. In doing that, moving from 1,700 to 2,000 tonnes per day, we expect to keep reducing cost — operating costs in the area of 10% by the end of the year. And this ramp-up will continue in 2026. So the idea is to get closer to [’25, 3,000] tonnes per day.

So that’s pretty much the strategy in Uchucchacua. Regarding El Brocal, we mine a slightly higher grades in the second quarter. We will continue to do that in the third and fourth quarter, but still in the order of 1.45% copper. That’s going to be our target copper production. But what we are doing right now is trying to give in a higher priority to the mining blocks or the areas with high gold and silver content. So we are shifting a little bit more pressure on developing the blocks that have 1.45% copper, but at the same time, have higher gold and silver production. That will continue also for the rest of the year. That’s pretty much what the strategy for El Brocal.

Cesar Perez-Novoa: I would assume that if you — sorry, go ahead.

Aldo Massa: I’m going to add the part of the concentrate of Cerro Verde. As we have announced, we started the commercialization of 40,000 tones of copper concentrates of Cerro Verde. And as everybody knows the market is very tight for this kind of material. It’s a very clean concentrate. And of course, for us, it’s a leverage to sell this concentrate with the other materials of Buenaventura. We already have received some improved terms to some of our concentrates and the idea is to keep selling those concentrates during the next years in order to have better terms for our own material.

Cesar Perez-Novoa: All right. And just coming back, if you’re tapping 1.45% grade in copper and you’re also maximizing the gold and silver content at El Brocal, I would assume that this is going to positively impact costs for the second half of the year. Am I making the correct assumption here?

Juan Carlos Ortiz Zevallos: Yes, on a cash basis and also on a cash cost basis, we have larger credits coming from gold and silver. The cost — remaining cost of copper will be diluted or reduced. Yes. We agree on that. I don’t have a particular number what target it could be. But as a general concept, it will be positively impacting the cost on a copper basis.

Operator: And your next question today will come from Tanya Jakusconek with Scotiabank.

Tanya M. Jakusconek: 3 questions. So my first question is on Cerro Verde. So I’m just trying to understand, Daniel, maybe you can help me on this one. This copper concentrate that you are purchasing, which is above and beyond the production that you get from Cerro Verde. How should I be thinking about this? Should I just be putting 20,000 tonnes through your revenue line for the second half of the year adjusted for treatment charges. Is that how I should be thinking about it? I just don’t know how I should be modeling this sort of new — it’s not production but this material.

Leandro Luis Martin Garcia Raggio: Yes, Tanya. Thank you for attending our conference and for your question. This copper of Cerro Verde, it’s back to back, almost. We — Aldo, maybe you can help us with the color of this.

Aldo Massa: Yes, Tanya, we already have sold 20,000 tonnes of dry metric tonnes of copper concentrate in the first half and our idea is to sell 20,000 tonnes more in the second half. We bought from Freeport, Cerro Verde at benchmark. And the idea is to have some margins when we sell into the market to the spot market. But talking about prices and QP, we are selling back to back. We don’t have any issues on any risk in our sales to the final consumer.

Leandro Luis Martin Garcia Raggio: The margin we can expect for this tonnage, it’s around $2.4 million, $2.6 million. This give us volume sales, but it’s not a big margin. You can model with $1.2 million each 10,000 tonnes, approximately.

Daniel Dominguez Vera: If I may add Tanya, if I may add, Tanya. The sales of these concentrates go to our revenue line and the purchase goes to the cost of sales. Of course, the sales have this margin of — in this case, was $1.4 million. We expect something like that for the second half of the year as well. This margin will be seen at the sales level — at the revenue level.

Tanya M. Jakusconek: Okay. I got that. And should I just be thinking — I mean, I know this is — I don’t know how to model like for 2025 is okay. But is this a process that you’re going to be continuing? Should I be thinking that this continues into 2026 as well?

Aldo Massa: Tanya, we already contract for the next 2 years until the year 2027, but we have to wait a little bit how will be in the market for the next years. This year, the difference between the benchmark and the spot was very high. We are not sure how big will be the next 2 years. of course, the idea is that we will have a margin, but we are not sure.

Tanya M. Jakusconek: Okay. No, that’s helpful. And then my second question is understanding Trapiche. We haven’t heard about this one for a while. I know that we were waiting for environmental permits in the second half of ’25 and we were targeting a feasibility study for mid-’26. Can you review with me the timing of some of these parameters? And what exactly is happening at this asset?

Leandro Luis Martin Garcia Raggio: Sure. Exactly, Tanya. We are in the process of concluding the questions — additional questions we have received from the authorities for the environmental strategy impact. And actually, the feasibility study will be finished in the third quarter — half of the 2026, maybe Alejandro can give us more color about the permitting and Renzo for the feasibility. Please go ahead.

Alejandro Hermoza: Yes, Leandro. Yes. As you mentioned, the environmental impact study is coming on track. You mentioned we are solving the final observations, and we’re still on target to having this approved by the end of the year, we should not have any delays on that. That’s in terms of the permission of course, we’re also working on the continuation of any other exploration activities, environmental permits related with that.

Renzo Macher: And in regards to the feasibility study. We just finished unloading the last 10 columns. Let’s remember that this is a secondary sulfide leaching process. So it takes like 180 to 200 days. So we are currently processing that information and updating our geochemical models to have more clarity into asset consumption before starting to close the study the design, the feasibility design and then start proceeding with the study estimates about how much can this cost to build and operate.

Tanya M. Jakusconek: Okay. All right. And then well — I know you said that the end of feasibility Q3 of ’26. And obviously, you will file that to the market so we can see this feasibility study?

Renzo Macher: Yes, we — the pre-feasibility study is in the market as soon as we update — as soon as we reach feasibility level, we will be updating it again.

Tanya M. Jakusconek: Okay. Perfect. Look forward to getting that next year. And then my final question, of course, is on San Gabriel. And I’m looking at your time line on your Slide 6, I see that you still have the tailings to do the water dam filter plant, yes, of course power line connection. And obviously, the first gold bar, so all of that from Q3 into Q4. I have a question for you. Number one, the stockpile, we were supposed to reach 300,000 tonnes by October of ’25, grading 4.5 to 5. Is this still a target? Because you just mentioned you only have 100 million tonnes. Sorry, 100,000 tonnes. Is that still correct?

Leandro Luis Martin Garcia Raggio: Yes. Well, this is — there is a ramp-up coming. Juan Carlos, can give you more detail about what we are thinking today.

Juan Carlos Ortiz Zevallos: We have 100,000 tonnes as of today by the end of June. The target we are reviewing that target — we are developing the mine. We’re putting more effort on driving the tunnels like the rams, and the main galleries. Not necessarily investing too much money on building up a large stockpile. We have the opportunity to do so, but we are reviewing that in order to put more effort on deepening down the mine development instead of building a large stockpile on surface. So we have everything in place, as I mentioned earlier, in order to put more pressure and try to bring more ore to the surface. But we reviewed that number probably will be smaller than that and start with maybe 200,000 in that order of magnitude that will be equivalent of 2 months of stockpile in advance before starting the — running on a continuous way the processing plant.

So 2 months of stockpile is kind of enough for sure stockpiling of the early start of the commissioning process.

Tanya M. Jakusconek: Okay. And then you are — you have a very, very tight pour to commercial production. I think it’s like a month or so, maybe 2 months, I don’t know. Can you remind me your definition of commercial production? Is it 30 days at 60% of the mill capacity? What is your definition, so I understand how you’re going to be able to do this quickly?

Leandro Luis Martin Garcia Raggio: Yes. We understand that the project is finished when we are working 20 days continuously, and we produce the 2 ore bars, 2 gold bars.

Tanya M. Jakusconek: Okay. So 2 gold bars, 20 days continuous production. Okay.

Leandro Luis Martin Garcia Raggio: I don’t know, Renzo, do you want to…

Renzo Macher: Yes, at 65x capacity which is…

Leandro Luis Martin Garcia Raggio: Sorry, exactly. 65 capacity, yes.

Tanya M. Jakusconek: Okay. All right. And then — so that gets me my commercial production. And then my understanding is that it’s going to take you 1 year to ramp up a very small operation. Can someone explain to me why it would take so long for such a small mine to ramp up?

Leandro Luis Martin Garcia Raggio: No, during 2026, we are not going to take 1 year, during 2026.

Tanya M. Jakusconek: Okay. So how long will it take to get to steady state? So we pour the gold bars in Q4 in December. We’re ramping up in 2026. When do we get to steady state?

Leandro Luis Martin Garcia Raggio: Well, the tailings, Juan Carlos explained the — all the work that we have to make with the tailings. We have to work on having a process, a continuous process. And we estimate maybe in the second half of 2026, we can reach the target of 3,000 tonnes per day. I don’t know, Juan Carlos, maybe you can give us more detail.

Juan Carlos Ortiz Zevallos: Yes. There are 3 main components of San Gabriel, the mine, the processing plant, and the tailings facility. So the ramp-up for the mine and the ramp-up from the processing plant, as Leandro says is going to be achieved probably in the first half of 2026. The earlier, the better, we’re pushing to do it faster. And the last component because they are in series, the last one is the compaction of the dry tailings in the dry stacking facility. The reservoir that we designed and we build is a valley that is in V shape. So the bottom part of the valley is very narrow. So even if we have 3,000 tonnes per day in the mine and 3,000 tonnes per day processing capacity at the plant. We need to place 3,000 tonnes per day at the bottom of the valley.

And the areas are very limited in there. So it’s kind of tricky at the beginning to place all the tailings at that rate in that narrow area. Whenever — as long as you are placing tailings, the area is growing layer by layer is making every layer you place, the area gets bigger because it’s wider, the valley, 10, 5 meters, 15 meters on top of the previous horizon. So it’s something that we are going to gain layer by layer. So it’s not — probably on the long term is this kind of the main restriction that we have from the short term and until the point that we have reached certain areas in which we are — we can install — and place dry tailings at the same rate of the mine and the processing plant.

Tanya M. Jakusconek: Okay. So for some reason, I was under the impression some of those tailings were going back and underground of paste fell. I guess that’s not. Okay.

Leandro Luis Martin Garcia Raggio: It was an option in the past, but because it’s tailings with a smaller cyanide content, we believe it’s not safe to bring that tailings back in the underground mine that has slightly acidic water and might generate a risk for people working underground.

Tanya M. Jakusconek: Okay. All right. That’s where I think I lost my connection. I thought some of it was coming back Okay. So it’s really a constraint by the valley for tailings. And once you get through a certain height, right, I guess you’ve got to get through that very narrow area. You build it up to a certain high — once it’s a certain height, it should be easier than for you to go.

Leandro Luis Martin Garcia Raggio: That’s correct, Tanya.

Tanya M. Jakusconek: So sometime in the second half — right, we are going to be at a steady state.

Leandro Luis Martin Garcia Raggio: That’s correct.

Operator: Ladies and gentlemen, with that, we will be concluding today’s audio question-and-answer session. I would like to turn the floor back over to Sebastian Valencia, Head of Investor Relations for any webcast questions.

Sebastian Valencia Carrasco: Thank you, operator. The first questions come from Omar of [indiscernible]. Can you comment on the impact of the road blockades in the mining ops and particularly when Buenaventura’s operations? And regarding Cerro Verde, yesterday the company announced a $300 million dividend. Do we have established the use of those proceeds?

Leandro Luis Martin Garcia Raggio: Thank you, [Omar]. Well, we — actually, we have no major problems in the blockage of roads in our operations. We have been working continuously. And regarding the Cerro Verde dividend, well, it comes along with all the — all our cash generation, and we should use these resources for continuous CapEx, investing in our explorations and why not evaluate a possible dividend for our shareholders.

Sebastian Valencia Carrasco: At this time, there are no further questions. I would like to turn the call over to the operator.

Operator: That concludes the question-and-answer session of today’s conference call. I would like to turn it back over to management for any closing remarks.

Leandro Luis Martin Garcia Raggio: Well, thank you very much for the time and effort to dedicated to joining us today. Your participation and your inputs are greatly appreciated. Thank you again, and have a wonderful day. Thank you.

Operator: Ladies and gentlemen, that concludes Buenaventura’s Second Quarter 2025 Earnings Results Conference Call. We would like to thank you again for your participation. You may now disconnect.