Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) Q2 2023 Earnings Call Transcript July 27, 2023
Operator: Good day, ladies and gentlemen. Welcome to the Compañía de Minas Buenaventura Second Quarter 2023 Earnings Results Conference Call. At this time, all participants are in a listen-only mode, and please note that this call is being recorded. I would now like to introduce your host for today’s call, Mr. Gabriel Salas, Investor Relations. Mr. Salas, you may begin.
Gabriel Salas: Good morning, everyone, and thank you for joining us today to discuss our Second Quarter 2023 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. Alejandro Hermoza, Vice President of Sustainability, Mr. Renzo Macher, Vice President of Projects; Mr. Juan Carlos Salazar, Geology and Exploration Manager; and Mr. Raul Benavides, Director. Before I hand our call over, let me first touch on a few items. On Buenaventura’s 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.
While management believes that its assumptions, expectations and projections are reasonable in the view of the currently available information, you are cautioned not to place undue reliance on these forward-looking statements. I encourage you to read the full disclosure concerning forward-looking statements within the earnings results press release issued on July 26, 2023. Let me now turn the call to Mr. Leandro Garcia.
Leandro Garcia: Thank you, Gabriel. Good morning to all, and thank you for attending this conference. We are pleased to present the results of the second quarter 2023 from Compañía de Minas Buenaventura. We have prepared a PowerPoint presentation, which is available in our web page. Before we go further, please take a moment to review the cautionary statement shown on slide number two. Moving on to slide three, highlights were as follows. Second quarter ’23 EBITDA from direct operations was $17.1 million, compared to negative US$12.9 million reported in the second quarter 2022. The six month — the first semester, EBITDA from direct operations reached $68.7 million, compared with US$74 million reported in the first semester of 2022.
2022 EBITDA does not include $300 million resulting from the sale of Buenaventura stake in Yanacocha. Second quarter 2023 net loss reached $5.4 million, compared to a $44.6 million net loss for the same period in 2022. The first six month of 2023, net income was $67.5 million, compared to $570.1 million net income for the six months of 2022. The six months — the first six months 2022 result includes $480 million net income from discounted operations, primarily due to the reclassification of Buenaventura’s interest in Yanacocha. The company recorded a $9.8 million provisional price adjustment for the accumulated first six months of 2023. This is comprised of negative $13.7 million in fair value of accounts receivable and a positive $3.9 million in adjustments, prior period liquidations.
This compares to US$35 million loss for the accumulate for first six months of 2022. Buenaventura six months — the first six months 2023, consolidated copper production increased 23% year-on-year. Zinc production decreased by 68%, lead decreased by 60%, silver decreased by 28% year-on-year, and gold decreased by 11% year-on-year. El Brocal underground mine production increased to 9,300 tons per day during the second quarter of 2023, compared to the 8,150 tons per day in the second quarter of 2022. The El Brocal ramp-up remains on target to reach 10,000 tons per day by year-end of 2022. Buenaventura’s cash position reached $202.4 million and our net debt decreased to US$520.9 million with an average maturity of 2.9 years by quarter end, June 30, 2023.
Second quarter ’23 capital expenditures were $49.7 compared to the $36.1 million for the same period in 2022. The first half of 2023, capital expenditures reached $85.9 million compared to $56 million in the same period of 2020, and includes $24.0 million related to the San Gabriel Project and $19.2 million related to the Yumpag Project. Buenaventura looks forward to permitting approval of Uchucchacua, El Brocal and Coimolache. The company continues to work with the Peruvian Environmental Authority, SENACE, on its final review. We expect permits for Uchucchacua and Yumpag approved during the third quarter of 2023. Cerro Verde paid a total dividend of $250 million on April 28, 2023, Buenaventura received $49 million relative to its stake Cerro Verde.
Cerro Verde will pay a second dividend on August 3, 2023, from which a Buenaventura will receive an additional US$49 million. Moving on to Slide 4, financial highlights. Total revenues during the second quarter were $173 million, which is 15% higher in comparison to the second quarter of 2022. The first half of the year, total revenues decreased to $359 million compared to the first half of 2022. As we mentioned before, our EBITDA from direct operations for the second quarter of 2023 was $17 million in comparison to a loss of $13 million during the second quarter of 2022. EBITDA from direct operations for the six months of 2023 decreased to $69 million in comparison to $74 million during the first six months of 2022. 2022 EBITDA does not include the US$300 million, resulting from the sale of Buenaventura’s products stake in Yanacocha.
Also, our net loss from continuing operations for the second quarter of 2023 was $5 million in comparison to the net loss from continuing operations of $44 million during the same period in 2020. Net profit from direct operations for the first six months of 2023 decreased to $67 million in comparison to $90 million during the first six months of 2022. The CapEx increased to $50 million in the second quarter of 2023 compared to the $36 million in the second quarter of 2022. The first six months of the year, CapEx totaled $86 million, a 53% increase in comparison to the first half of 2022. Moving on to Slide 5, please, attributable production. Total gold attributable production in the second quarter of 2023 was 39,000 ounces, 17% lower than the figure reported in the same quarter of the previous year.
This decrease is mainly explained by La Zanja mining operation suspensions in the fourth quarter of 2022, and lower production at Coimolache. In the first semester of 2023, total gold attributable production was 78,000 ounces, 19% lower than the same period in 2022. Silver attributable production for this quarter was 1.4 million ounces, which shows a decrease of 12% compared to the figure reported in the second quarter of 2022. This decrease in production was primarily due to Julcani and El Brocal performance during the first half of 2023, silver attributable production was 2.5 million ounces, 25% lower than the first semester of 2020. Finally, our copper attributable production for the second quarter of the year was close to 31,000 metric tons, 11% increase compared to the same period in 2022.
During the first half of 2023, copper attribute or production was 60,000 metric tons, a 9% compared to the same period of 2022. Moving on to Slide 6, our all in sustaining cost and cost applicable to sales. The all in sustaining cost from our direct operations in the first semester of 2023 increased by 30% to $1,875 per ounce of gold, the all-in sustaining cost for the first semester of 2023 has increased compared to the previous year due to lower production – production levels at Julcani, La Zanja, Coimolache. However, we anticipate it will decrease in the upcoming quarters as production meets our guidance. This calculation only takes into account our ownership in Buenaventura direct operations, La Zanja and Coimolache. El Brocal has been excluded from this figure as it primarily producers of copper.
The cost applicable to sales for the first semester of 2023 were as follows. For gold US$1,131 per ounce, which is almost equal to a year ago. For silver, US$21.79 per ounce, which is 25% higher than a year ago. For lead US$1,229 per metric ton, which is 7% lower than a year ago. For copper, US$6,475 per metric ton, which is 3% lower in comparison to a year ago. Finally, in the case of zinc, the cost applicable to sales was US$1,884 per metric ton, which is 39% lower than a year ago. Moving on to slide 7. Here, we show — here we are presenting, in one snapshot, the current development level of for each of our projects. Moving on to slide 8. Our projects in the case of Yumpag our Brownfield project, our mine development is around 2,100 meters during the second quarter of 2018.
Processing plant will resume operations during the third quarter of 2023 in a short batch campaign that will help to identify and correct any potential mechanical problem. Environmental permit for mining expected on August 2023, due to delays in SENACE’s approval process. In the case of San Gabriel, our Greenfield project, CapEx related to earthworks and construction-related water escalation, authority admitted our power line environmental impact assessment. Four out of five roadshows have been completed by the end of the second quarter of 2023, and a final public hearing has been scheduled for the third quarter of 2023. Turning to the CapEx guidance, it has been revised to between $140 million and $160 million. This does not affect project total CapEx, nor target production in starting the second half 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.
Operator:
Leandro Garcia: Well, before we finish today’s conference call. Thank you very much for making the time to join us today. Additionally, I would like to invite you to our Buenaventura’s Day that will be held on December 4, in New York. And the indications will be released today. Thank you again, and have a wonderful day.
Operator: Ladies and gentlemen, that concludes Buenaventura’s second quarter 2023 earnings results conference call. We would like to thank you again for your participation. You may now disconnect.
