FourthQuarter2019 Results Conference Call
Transcript of FourthQuarter2019 Results Conference Call
Fourth Quarter 2019 Results Conference Call
Cautionary Statement
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This presentation contains certain information that may constitute forward-looking information underapplicable U.S. securities legislation, including but not limited to information about costs applicable to sales,general and administrative expenses; production volumes; current expectations on the timing, extent andsuccess of exploration; development and metallurgical sampling activities, the timing and success of miningoperations and the optimization of mine plans. This forward-looking information entails various risks anduncertainties that are based on current expectations, and actual results may differ materially from thosecontained within said information. These uncertainties and risks include, but are not limited to, the strengthof the global economy, the price of commodities; operational, funding and liquidity risks; the degree towhich mineral resource estimates are reflective of actual mineral resources; the degree to which factorswhich would make a mineral deposit commercially viable are present, and other risks and hazardsassociated with mining operations. Risks and uncertainties about the Company’s business are more fullydiscussed in the BVN’s form 20-F filed with the Securities and Exchange Commission in the U.S. andavailable at www.sec.gov . Readers are urged to read these materials. Buenaventura assumes no obligationto update any forward-looking information or to update the reasons why actual results could differ fromsuch information unless required by law.
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1. 4Q19 EBITDA from direct operations was US$ 73.9 million, compared to US$ 68.7 million reported in 4Q18.
2.4Q19 Adjusted EBITDA including associated companies reached US$ 176.8 million, compared to US$ 147.4 million in 4Q18, primarily due to improved results at Cerro Verde and Coimolache.
3. 4Q19 capital expenditures were US$ 38.4 million, compared to US$ 41.2 million for the same period in 2018.
4. 4Q19 net loss was US$ 53.7 million, compared to a net loss of US$ 72.9 million for the same period in 2018.
5.The Company’s portfolio of greenfield projects continued progressing well during the quarter. At Yumpaq (Ag), San Gabriel (Au) and Trapiche (Cu) we are declaring ore reserves in 1Q20.
6.In 4Q19 Buenaventura generated US$ 13.6 million in incremental EBITDA through the Company´s De-Bottlenecking Program. The program has enabled BVN to increase the efficiency of its Tambomayo, Uchucchacua, Orcopampa and El Brocal mines.
7. Yanacocha’s Quecher Main project was on budget and achieved commercial production in 4Q19.
8.Cerro Verde’s processing plants averaged 396,800 metric tons of ore per day, approximately 10 percent above nameplate capacity.
9. A US$ 0.027 per share/ADS dividend payment was proposed at Buenaventura’s February 20, 2020 Board Meeting.
4Q 2019 Highlights
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Summary
During 2019, three of our nine mining assets performed below our expectations
Four Tier System
PROJECTS
Notes: (1) All values cumulative as of December, 2019(2) Includes 100% of Buenaventura (Julcani, Tambomayo, Orcopampa, Uchucchacua, Projects), La Zanja, El Brocal, Huanza,
Contacto, Condesa, other small business of the Group(3) Includes (2) + 40.1% of Coimolache, 19.58% of Cerro Verde and 43.65% of Yanacocha
Sup
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OPERATIONS
Drivers
Safety
Human Resources
Social Management
Environmental Management
Technology and Innovation
Energy
Communications
Head Office
TambomayoOrcopampa
CoimolacheLa Zanja
Yanacocha
Gold
Base Metals
Silver
Gold
Silver
Base Metals
UchucchacuaJulcani
San Gabriel
Yumpaq
Marcapunta Norte-SurYanacocha’s Sulfides
Coimolache’s SulfidesEl Faique
TrapicheSan Gregorio
El BrocalCerro Verde
AISC
FY19: US$/Au Oz 1,140
FY18: US$/Au Oz 955
EBITDA (Direct Operations) 2
FY19: US$ 202.2M
FY18: US$ 315.4 M
EBITDA (Including Associates) 3
FY19: US$ 620.9 M
FY18: US$ 662.9 M
Net Debt / EBITDA:
FY19: 2.06x
FY18: 0.99x
Debt Rating 1Q20
- Moody’s: Ba2 (negative)
- Fitch: BBB-
Debt Rating FY18
- Moody’s: Ba2 (stable)
- Fitch: BBB-
FINANCIAL RESULTS (1)
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Strategic Roadmap – 4Q19
6Notes: (1) Consolidated Capex includes 100% BVN, 100% La Zanja and 100% El Brocal.(2) Considers the de-bottlenecking program.
Financial Highlights
252.3 235.5
1,150.7
867.9
4Q18 4Q19 FY 2018 FY 2019
In US$ millions In US$ millions
In US$ millions
Total Revenues EBITDA Including Associates
Net Income
-7%
In US$ millions
Free Cash FlowCAPEX (1)
In US$ millions
229
EBITDA Direct Operations
In US$ millions
-25%
68.7 73.9
315.4
202.2
4Q18 4Q19 FY 2018 FY 2019
147.4 176.8
662.9 620.9
4Q18 4Q19 FY 2018 FY 2019
-72.9
-53.7
-13.4 -12.2
4Q18 4Q19 FY 2018 FY 2019
41.2 38.4
111.3 102.6
4Q18 4Q19 FY 2018 FY 2019
-8%
44
-66
229
-59
4Q18 4Q19 FY 2018 FY 2019
-36%-6%
20%8%
-7%
-9%-26%
2019 EBITDA – Quarterly Positive Trend
7
24,685
45,721
55,837
73,870
1Q19 2Q19 3Q19 4Q19
194.2
128.58115.24
123.6
124.7
2018 2Q19 3Q19 4Q19 2019
Unit Cost US$/MT
122.7
106.689.9 101.2
103.2
2018 2Q19 3Q19 4Q19 2019
37.0
34.2
42.5
37.0
37.3
2018 2Q19 3Q19 4Q19 2019
Tambomayo Uchucchacua El Brocal
Buenaventura Direct Operations
Unit Cost US$/MT Unit Cost US$/MT
In US$ 000
-36% -16%
2019 Production Cost –Positive Trend YOY (US$/MT)
Notes: (1) All values cumulative as of December, 2019(2) Includes 100% of Buenaventura (Julcani, Tambomayo, Orcopampa, Uchucchacua, Projects), La Zanja, El Brocal, Huanza,
Contacto, Condesa, other small business of the Group(3) Includes (2) + 40.1% of Coimolache, 19.58% of Cerro Verde and 43.65% of Yanacocha
Sup
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OPERATIONS
PROJECTS
Drivers
Safety
Human Resources
Social Management
Environmental Management
Technology and Innovation
Energy
Communications
Head Office
TambomayoOrcopampa
CoimolacheLa Zanja
Yanacocha
Gold
Base Metals
Silver
Gold
Silver
Base Metals
UchucchacuaJulcani
Quecher MainSan Gabriel
Yumpaq
Marcapunta Norte-SurYanacocha’s Sulfides
Coimolache’s SulfidesEl Faique
TrapicheSan Gregorio
El BrocalCerro Verde
AISC
FY19: US$/Au Oz 1,140
FY18: US$/Au Oz 955
EBITDA (Direct Operations) 2
FY19: US$ 202.2M
FY18: US$ 315.4 M
EBITDA (Including Associates) 3
FY19: US$ 620.9 M
FY18: US$ 662.9 M
Net Debt / EBITDA:
FY19: 2.06x
FY18: 0.99x
Debt Rating 1Q20
- Moody’s: Ba2 (negative)
- Fitch: BBB-
Debt Rating FY18
- Moody’s: Ba2 (stable)
- Fitch: BBB-
Financial Results (1)
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Strategic Roadmap – 4Q19
Notes: (1) Includes 100% of Tambomayo, Orcopampa, Uchucchacua, Julcani; 61.43% of El Brocal; 53.06% of La Zanja;
40.095% of Coimolache; 43.65% of Yanacocha and 19.58% of Cerro Verde.
78 71
366
234 62 44
225
230
139 115
590
464
4Q18 4Q19 FY 2018 FY 2019
BVN Direct Operations Yanacocha
26.3
20.1
5.8 5.6
4Q18 4Q19 FY 2018 FY 2019
In 000 AuOz In M AgOz
Gold Production Silver Production
-9%
-24%
-18%
-28% -3%
-36%
2%
-21%
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Attributable Production (1)
Notes: (1) Includes 100% of Tambomayo, Orcopampa, Uchucchacua, Julcani; 61.43% of El Brocal; 53.06% of La Zanja;
40.095% of Coimolache; 43.65% of Yanacocha and 19.58% of Cerro Verde.
7.5 7.528.6 26.823.9 23.9
93.2 89.1
31.4 31.4
121.8 116.0
4Q18 4Q19 FY 2018 FY 2019
BVN Direct Operations Cerro Verde
10.0 10.3
37.040.7
4Q18 4Q19 FY 2018 FY 2019
In 000 ZnMT
In 000 CuMT
Zinc Production
Copper Production
In 000 PbMT
Lead Production
-4%
-22%
13.9 13.6
58.5 55.6
4Q18 4Q19 FY 2018 FY 2019
-2%
-5% 10%
-5%
1% -6%
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Attributable Production (1)
2%
1,033
11.81
1,297
5,843
1,935
1,002
13.97
1,388
5,352
1,983
1,485
1,311
4Q18 4Q19
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In US$/AuOz
AISC (1) CAS (2)
Gold(US$/Oz)
Copper (US$/MT)
Silver(US$/Oz)
Zinc
(US$/MT)
Notes: (1) Considers 100% from Buenaventura, 53.06% from La Zanja and 40.095% from Tantahuatay
(2) Gold, Silver and Zinc CAS includes: 100% from Buenaventura, 100% from La Zanja and 100% from El Brocal
+7%
4Q19
Lead (US$/MT)
-3%
+18%
+2%
4Q18
-8%
-12%
All-in Sustaining Cost and Costs Applicable to Sales
De-Bottlenecking Program 2019
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ORCOPAMP
De-Bottlenecking Program 2019
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De-Bottlenecking Program 2020
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Enhanced Exploration Approach
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Tambomayo Orcopampa
Uchucchacua
15,723 12,540 9,984 1,229
46,404
67,922
86,415
59,509
2016 2017 2018 2019
Tunneling Diamond Drilling
2,050 3,866 5,631 719
27,727 29,683
52,012 52,357
2016 2017 2018 2019
Tunneling Diamond Drilling
15,767 13,916 8,523 1,778
52,866
71,289
95,476
57,402
2016 2017 2018 2019
Tunneling Diamond Drilling
More diamond drilling than tunneling
In 2019, the main effortwas to convert Yumpaq’sresources into reserves
BVN’s Ore Reserves
16
213%
37%
4%
2%
39%
Positive trend in terms of ore reserves
Notes: (1) All values cumulative as of December, 2019(2) Includes 100% of Buenaventura (Julcani, Tambomayo, Orcopampa, Uchucchacua, Projects), La Zanja, El Brocal, Huanza,
Contacto, Condesa, other small business of the Group(3) Includes (2) + 40.1% of Coimolache, 19.58% of Cerro Verde and 43.65% of Yanacocha
Sup
po
rts
OPERATIONS
PROJECTS
Drivers
Safety
Human Resources
Social Management
Environmental Management
Technology and Innovation
Energy
Communications
Head Office
TambomayoOrcopampa
CoimolacheLa Zanja
Yanacocha
Gold
Base Metals
Silver
Gold
Silver
Base Metals
UchucchacuaJulcani
Quecher MainSan Gabriel
Yumpaq
Marcapunta Norte-SurYanacocha’s Sulfides
Coimolache’s SulfidesEl Faique
TrapicheSan Gregorio
El BrocalCerro Verde
AISC
FY19: US$/Au Oz 1,140
FY18: US$/Au Oz 955
EBITDA (Direct Operations) 2
FY19: US$ 202.2M
FY18: US$ 315.4 M
EBITDA (Including Associates) 3
FY19: US$ 620.9 M
FY18: US$ 662.9 M
Net Debt / EBITDA:
FY19: 2.06x
FY18: 0.99x
Debt Rating 1Q20
- Moody’s: Ba2 (negative)
- Fitch: BBB-
Debt Rating FY18
- Moody’s: Ba2 (stable)
- Fitch: BBB-
Financial Results (1)
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Strategic Roadmap – 4Q19
Increase ValueFocus on optimized capital allocation
Disciplined processFocus on implementing project management best practices
To implement a disciplined process and increase value through our diversified portfolio of projects
GoldSilverBase Metals
Not operated byBVN
Exploration
Rio Seco Cu – As
(6)
Trapiche(4)
San Gabriel (3)
Chacua10y (1)
(5)
San Gregorio (8)
El Faique(9)
Emperatriz(10)
Scoping Prefeasibility Feasibility Development Construction Startup
Coimolache Sulfides (7)
Yanacocha Sulfides (2)
65
3
7 2
1
9
4
8
Moquegua
Lima
Apurímac
Pasco
Cajamarca
Piura
BVN´s operations presence
Our Projects
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Development Level
Notes: (1) Chacua 10y includes Yumpaq 18
Pipeline of Projects – Update
Greenfield Projects – San Gabriel (Au)
Project Maturity
Highlights
• Reported ore reserves of 11.6 MT @4.68 g/t (1.7 M Oz Au).• Started Feasibility study in parallel with permit to construct / operate.• “Prior Consultation” permit (ILO 169 consultation process with rural communities) in process with an expected date by 2Q20.Technical Assumptions• Processing Plant: 3 ktpd (cyanidation)• Estimated Annual Production: 120k – 150k Oz Au.Financial Estimates• Estimated initial CAPEX: US$ 370 - 430 M.• Estimated EBITDA: US$ 110 - 150 M
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Updated Geological Interpretation
Mineralization based on vertical structural control (02 domains)
More potentialat depth / lessstratabounddependency
Greenfield Projects - Trapiche (Cu)
Project Maturity3D Plant View
Highlights
• Reported reserves of 283.2 MT @0.51% Cu (1.4 Mt Cu).• Finished engineering drill holes and 98% of advance on on-site pilot plant to support column testing
throughout 2020.• Reached agreement with Mollebamba’s Municipality for access road right-of-way.Technical Assumptions• Processing Plant: 45-65 k tpd (heap leaching + SX-EW)• Estimated Annual Production: 50 – 70 k MT Cu.
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• Pilot plant was upgraded to perform industrial continuous testing.• Hatch was hired to validate the metallurgical process.• Samuels Engineering was hired for the design and the FS studies.• EIA will be submitted in 2Q20 and is expected to be approved by 1Q21.• Unlock value for the Cu portfolio.Technical Assumptions• Main source: Marcapunta Cu Concentrates• Heap leaching at atmospheric pressure• Copper disolved: classic technology – SX-EW• Arsenic fixed as scorodite
Highlights
Greenfield Projects - Rio Seco (Cu As)
Location Map Project Maturity
Río Seco
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Greenfield Projects – Tantahuatay’sSulfides 20k (Cu)
Long Section Project Maturity
Highlights
• Stand alone business case• Expect to reach Pre-Feasibility stage by 1H20.• Preparing the EIA process initial documentation.• Started the basic engineering for the tailings dam facility.
GEOLOGY
MINE
PLANT
FACILITIES
ENERGY
WATER
INFRA
LAND
PERMITS
SAFETY
WORKFORCE
SOCIAL
Q&A
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Appendix
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Gold Volume Sold
25
26 26
119
97
4Q18 4Q19 FY18 FY19
In 000 Au Oz
Tambomayo at 100%
Volume Sold CASIn US$/AuOzIn 000 Au Oz
Orcopampa at 100%
13 15
117
41
4Q18 4Q19 FY 2018 FY 2019
Volume Sold CASIn US$/AuOz
3Q19: 1,699
3Q18: 1,052
In 000 Au Oz
Orcopampa at 100%
Volume Sold CASIn US$/AuOz
4Q19: 976
4Q18: 1,734
-44% -10%
-19%
FY19: 1,489
FY18: 1,020
+46%
-65%
4Q19: 766
FY19: 679
4Q18: 850
FY18: 626
+9%
9% 2%
Gold Volume Sold
26
146107
522 529
4Q18 4Q19 FY18 FY19
20
6
74
31
4Q18 4Q19 FY18 FY19
51 52
172 162
4Q18 4Q19 FY18 FY19
In 000 Au Oz
Yanacocha at 100%
Volume Sold CASIn US$/AuOz
In 000 Au Oz
Coimolache at 100%
Volume Sold CASIn US$/AuOz In 000 Au Oz
La Zanja at 100%
Volume Sold CASIn US$/AuOz
+1%
33%
+130%
4Q19: 694
4Q18: 742
FY19: 684
FY18: 675
4Q19: 1,780
4Q18: 773
FY19: 1,233
FY18: 891
+38%
4Q19: 958
4Q18: 722
FY19: 776
FY18: 831
-7%
-27%
+1%
-69%
-59%-6%
-7%+2%
Silver Volume Sold
27
0.6 0.6
2.4 2.5
4Q18 4Q19 FY18 FY19
2.9 2.6
14.4
9.8
4Q18 4Q19 FY18 FY19
In Ag Oz M
Uchucchacua at 100%
Volume Sold CASIn US$ Ag/Oz
Julcani at 100%
Volume Sold CASIn US$ Ag/OzIn Ag Oz M
-6%
-11%
+25%
5%
-32% 4Q19:14.90
4Q18: 11.91
FY19: 12.15
FY18: 10.37
+17%
4Q19: 13.20
4Q18: 14.04
FY19: 13.49
FY18: 14.98
-10%
-4%
Copper & Zinc Volume Sold
28
122.1 122.1
476.0 455.3
4Q18 4Q19 FY18 FY19
8.0 9.7
37.5 36.8
4Q18 4Q19 FY18 FY19
11.5 11.5
43.7 41.0
4Q18 4Q19 FY18 FY19
El Brocal (Copper) at 100%
Volume Sold CASIn US$/CuTMIn 000 Cu MT
-8%
In 000 Cu MT
Cerro Verde at 100%
Copper Production Cash CostIn US$/Cu Lb
El Brocal (Zinc) at 100%
Volume Sold CASIn US$/ZnTMIn 000 Zn MT
+17%
+1%
-6%
4Q19: 5,352
4Q18: 5,844
FY19: 5,385
FY18: 5,488
-2%
-2%
4Q19: 1,989
4Q18: 1,696
FY19: 2,007
FY18: 1,569
+28%
4Q19: 1.60
4Q18: 1.63
FY18: 1.55
FY19: 1.57
-2%
21%
-4%
Fourth Quarter 2019 Results Conference Call