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Transcript Summary

Compañía de Minas Buenaventura S.A.A. delivered an exceptionally strong first quarter in 2026, with revenue exceeding $600 million and net income reaching $355 million. The quarter was highlighted by the successful ramp-up of the San Gabriel gold project, which drove an 80% increase in gold production. While the project faced minor technical challenges due to clay content in the ore, management has a clear mitigation plan involving a $1 million equipment investment. Significant permitting milestones were achieved across the portfolio, including environmental approvals for the Trapiche project and capacity increases for El Brocal and Yumpag. The company’s financial position is extremely robust, supported by a $760 million cash balance and consistent dividends from Cerro Verde, which are expected to total approximately $200 million for the year. Management remains optimistic about the political climate in Peru, anticipating stability following recent elections. With copper prices remaining high and new production coming online, Buenaventura is well-positioned for continued growth and capital flexibility, maintaining a disciplined focus on execution and permitting to unlock the full value of its diversified asset base.

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Buenaventura: A Debt-Heavy Mining Operation Buried Under Systematic Tax Seizures and Negative Cash Flows

Full Earnings Call Transcript — Q1 • 2026-04-30

Operator: Good morning, ladies and gentlemen. Welcome to Compañía de Minas Buenaventura S.A.A. First Quarter 2026 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. Sebastian Valencia, Head of Investor Relations. Mr. Valencia, you may begin.
Sebastian Valencia: Good morning, everyone, and thank you for joining us today to discuss our first quarter 2026 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; Mr. Jorge Navires, Chairman; and Mr. Raul Navidres, Director. Before I hand the call over, let me first touch on a few items. On Compañía de Minas Buenaventura S.A.A.’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 these assumptions, expectations, and projections are reasonable in light 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 04/29/2026. Let me now turn the call over to Mr. Leandro Garcia.
Leandro Garcia: Thank you, Sebastian. Good morning, and thank you for joining us today to discuss the quarterly results of the company. On Slide two is our cautionary statement, important information that I encourage you to read. Today, we will talk about our first quarter 2026 performance, our main achievements, and our priorities for the future. After the presentation, we will be available for the Q&A session, where our team will be happy to answer your questions. Next slide, please. I will start with a summary of our operational results for the quarter, followed by an update on our permitting status. Gold production was 30 thousand ounces, up 80% year over year, mainly due to the ramp-up operations at San Gabriel. As production volumes continue to ramp up, the company expects to begin recording sales in the second quarter of 2026. Silver production reached 3.9 million ounces, up 6% year over year, compared to 3.7 million ounces in the same period last year. This increase was mainly driven by higher production at El Brocal. The result is in line with the mine plan for the quarter. We focused on processing ore that had been previously classified as low-grade silver ore. Uchucchacua and Tambomayo also contributed to this result. At Uchucchacua, production increased due to higher throughput and higher silver. At Tambomayo, production improved as we prioritized higher-grade ore from the upper sections of the mine. Copper production in this first quarter reached 10.9 thousand tons, down 11% year over year. This decrease was mainly driven by lower production at El Brocal, as we focused on processing silver ore. Turning now to permitting, I will briefly review the permits received. During 2026, we received Stage one of the operating permit for San Gabriel. This approval authorizes us to start operations to process and commercialize the mine ore. Also at San Gabriel in April 2026, we received the water use license. This permit allows the storage and use of water at the Agani Dam. At Yumpag, the second ITS received in 2026 allows us to increase ore extraction to 12 thousand tons per day. In addition, we expect to receive the mine plan modification in 2026 as planned, which is required to achieve this level of production. At El Brocal, the first ITS approved in 2026 increases mine extraction capacity to 17 thousand tons per day, in line with the company's medium-term strategy. Finally, at Trapiche, the Environmental Impact Assessment was approved in 2026. This permit provides environmental certification for the construction and operation of the project. Overall, these permitting milestones help unlock capacity, support ramp-up, and increase operational certainty across our portfolio. Moving on to the next slide, I would like to summarize our first quarter results. Starting with revenues, total revenues reached $625 million in the first quarter, more than doubling year over year, reflecting stronger operating performance and a more favorable market environment. Looking at EBITDA from direct operations, we achieved $386 million, more than three times higher year over year, with margins improving from 41% to 62%. Stronger operations resulted in a net income of $355 million, a 142% year-over-year increase. On the capital allocation side, CapEx for this quarter totaled $81 million, mainly focused on San Gabriel alongside sustaining Trapiche, aligned with our growth priorities. After the quarter end in April 2026, Compañía de Minas Buenaventura S.A.A. received $59 million in dividends from our stake in Cerro Verde. Total dividends received year to date 2026 amounted to around $157 million. Finally, all of this is reflected in our balance sheet strength. The quarter ended with a cash position of $760 million and a total debt of $[inaudible] million, resulting in a net cash positive position. Moving on to cost applicable to sales. Starting with the corporate cash, changes are mainly explained by developments at El Brocal, where we see higher personnel costs. These are mainly driven by increased workers' profit sharing provisions, reflecting improved profitability. In addition, higher cement consumption and foreign exchange impact affected costs. These effects were partially offset by improved commercial terms. Silver cash increased due to higher personnel costs, together with higher commercial deductions related to escalates mainly at Uchucchacua and Julcani. Gold cash increased versus the same period last year due to higher personnel costs, lower throughput reducing scale efficiencies, and higher operation costs at Orcopampa and Tambomayo. On the next slide, we highlight our strong free cash flow generation in 2026. Solid operating performance supported by dividends received allowed us to close the quarter with a cash position of $760 million. To conclude the presentation, I would like to share a few final thoughts. First, San Gabriel entered the ramp-up phase during 2026 and began contributing to Compañía de Minas Buenaventura S.A.A.’s results in line with expectations. Second, we continue to make progress on permitting and regulatory approvals across the portfolio, supporting the disciplined execution of the company's long-term strategy. Third, execution across the portfolio remained consistent, delivering predictable results and reinforcing balance sheet strength and financial flexibility. Finally, cash generation remained robust and well diversified across direct operations and affiliate companies, supported by continued dividend inflows from Cerro del Rey. Thank you for your attention. I will hand the call back to the operator to open the line for questions. Operator?
Operator: Please go ahead. Thank you. We will now begin the question and answer session. To ask a question, dial in by phone and press star then one on your telephone keypad. Make sure your mute function is turned off, and if you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. The first question today comes from Carlos De Alba with Morgan Stanley. Your line is now live. Please ask your question.
Carlos De Alba: Thank you. Good afternoon, everyone. So I have three questions, if I may. The first one is, can you provide more color and details on how San Gabriel ramp-up is going? What are the challenges, maybe bottlenecks that you are facing at this stage? And what is expected output for the second quarter at San Gabriel? The second question is on El Trapiche strategy. Clearly, you got now the environmental approval. You have a very strong balance sheet. Have you decided if you are going to pursue this project and build it on your own, or if doing it together with a partner is more likely? And then finally, on dividends, what are the expectations for further dividends from Cerro Verde in addition to the ones that you have received to date, including the $59 million in April? Thank you.
Leandro Garcia: Thank you, Carlos, for your questions. Well, beginning with the first question about San Gabriel, as you know, we are in the first stage of the ramp-up. We have some challenges, but up to now, we are in line with expectations. Maybe Juan Carlos Ortiz can give you more details about how we are going with San Gabriel. Please, Juan Carlos.
Juan Carlos Ortiz: Sure, Leandro. Thank you, Carlos, for your question. The projects that we have in the first quarter in San Gabriel were related to the conclusion of the commissioning, the training of our team, and starting to run all the machines as a sequence, as a system, right? It is crushing, milling, cyanidation, filtration of the tailings. So we have some progress on that regard. We are almost finishing with all the commissioning part, the mechanical assurance that everything is in place. Now we are training our people and starting the fine-tuning of every single circuit. For instance, we have some challenges with the high moisture of the ore getting stuck on the conveyor belt for the crushing circuit. This is going to be solved in the coming weeks, first, because we are entering the dry season, and second, because we are changing the system to remove the clays in the screening of the crushing circuit. Then in the milling circuit, we had some malfunction of an electronic device. We already found the trouble and we switched that part with a new one, so we are running okay right now with the grinding mill weight. In cyanidation, from the mechanical point of view, we have small challenges like the speed of the pumps and some resizing of some small boxes to avoid any potential spilling of the slurry. And in the filtration part, we are pretty much at 50% delivery from the vendor. We finished all the commissioning part, and now we are putting the filter presses to filter the tailings. With a 50% product, we are running with eight bars of pressure, and we are moving step by step up to reach the 14 bars that are considered in the design. From the progress in the processing plant to the tailings dam, we are starting right now in May. We will start putting the tailings out of the temporary reservoir, start to dry the tailings, and probably in June, we will start placing the tailings in the tailings dam. That is going to be the first time we do that in San Gabriel. We need to speed up; we anticipate some training process to be transferred to the team from the team of Tambomayo to the team of San Gabriel to do exactly what we learned to do in Tambomayo: how to dry the tailings, how to reduce the moisture, how to place the tailings in the tailings reservoir, and how to compact those tailings. So that is exactly the agenda of the second quarter. We are expecting to solve most of the, or the majority of, the most sensitive issues from the throughput and from the mechanical availability of the processing plant in the second quarter. And as we anticipated earlier in the previous conference call, the main constraint will be the area that we have available in the tailings dam. It is a narrow valley and we are starting working at the bottom of the valley, so we do not have that much area available. Every single lift that we compact, we gain additional area. So gradually, we increase tonnage as an average. We expect to finish at 2 thousand tons per day by December 2026 and reach full capacity, 3 thousand tons per day, by 2027. So that is pretty much what we are doing right now, Carlos.
Leandro Garcia: Thank you, Juan Carlos. Going back to your second question about Trapiche, we are far from that decision if we go alone or we call for a partner to post-develop that project. We are in a stage of investigating all the geotechnical aspects and more drillings we need. Maybe Renzo can help us with what we are facing this year and the following two years until we reach the feasibility study. Please, Renzo, go ahead.
Renzo Macher: Sure, Carlos. We are going to be continually de-risking the project in regards to acid consumption, acid pricing, and acid logistics. That is going to be one of our main goals. We continue exploration of the primaries, and we are going to be starting, as we finish the Environmental Impact Assessment study, with the next permit or the next social permit, which is the previous consultation permit in this case.
Leandro Garcia: Thank you, Renzo. Going back to your question about dividends from Cerro Verde, well, we foresee an excellent year for Cerro Verde. The operations are going as planned. They do not have a dividend payment policy, but I think this year cash generation will be extremely good. We have some expectations. Daniel, please.
Daniel Dominguez Vera: Thank you, Leandro, and thank you, Carlos, for your question. Yes, as Leandro was saying, Cerro Verde will generate a lot of cash this quarter or this year, considering that the price of copper is over $12 thousand per ton. We expect Cerro Verde to generate in excess of $2.5 billion of EBITDA. They have small CapEx, $350 million to $400 million. In taxes, they should be paying around $1 billion. They do not have any debt. So the free cash flow for this year in Cerro Verde, considering the current prices for copper, should be in the order of $1.2 billion to $1.3 billion. They already have cash in their balance, the minimum cash required for the operations. So they should be distributing around $200 million to Compañía de Minas Buenaventura S.A.A., from which they have already distributed $160 million from January to April.
Operator: The next question comes from Tanya Jakusconek with Scotiabank. Please go ahead.
Tanya Jakusconek: Great. Thank you so much for taking my questions. Good afternoon, everybody. I wanted to follow back on San Gabriel. I appreciate all of the hard work you are doing on getting the ramp-up, and there is always something going on mechanically and otherwise. But I must say I am surprised about the clay in the ore. I did not realize that there was clay in the ore. Can you just remind me what exactly, what mineral do you have, and how are you removing this? And are you surprised you have clay in the ore?
Juan Carlos Ortiz: Yes, we do have two types of clay. I do not know how to pronounce it properly, but this is montmorillonite or a kind of expansive clay that we have in the deposit. It varies from 1% to 8% in different places of the deposit. When we transport the ore from the mine, when we strike the ore from the mine, we usually have between 4% to 5% moisture, no more than that. But when we put the ore in the stockpiling surface, during the rainy season, the moisture can go up to 40%, only from the rain coming down into the stockpile. And this clay, because it is an expansive or swelling clay—I think that is the technical term—generates a lot of problems in the crushing circuit because it is very sticky. It starts getting into the boxes in between the transfer point of the crusher into the conveyor belt, or at the end of the conveyor belt in the stockpile, or from the stockpile into the feeder to the mill. Solutions to that: there are two things that we are analyzing. One is using a screen where you use water so we can spray water on top of the ore while it is passing through the surface of the screen to remove the fine fraction. That is one option. It is not going to take that much time. And the other is using what we use in Brocal, what we also use in Colquijirca. That is a drum where we have screen around the surface of the drum so we can wash the ore as it travels through the drum. That is something that we have been using for many, many years when we process the ore from the open pit, and also we use that in Colquijirca because the ore underground also has, depending on the area, a high content of clay and complicated questions. That is going to be the solution for the clay areas underground for the next rainy season that starts in December–January next year.
Tanya Jakusconek: Is this clay consistent throughout the ore body, or is it just in patches? And have you seen, once you get it through the crushing circuit and through the conveyor, does it negatively impact your recoveries?
Juan Carlos Ortiz: No, it is not impacting negatively the recovery. We need to make a little adjustment in the density of the slurry in order to reduce the viscosity. If we go to 1.4 thousand grams per liter, the viscosity goes too high, so we need to go down to 1.32 thousand grams per liter in order to have a fluid slurry that has all the rheological properties as designed, and then the interaction between the cyanide, the gold, and the activated carbon works as planned. So it is not a sensitive issue. It is something that we need to find a way to operatively treat whenever we are bringing that material into the processing plant.
Tanya Jakusconek: Okay. And sorry, did you answer if it is all the ore body or is it in specific areas?
Juan Carlos Ortiz: We are studying that because we do not yet have a detailed distribution of the clay. We have information, but we have not developed a model of clay distribution in the deposit. We have a distribution of gold, silver, carbon, organic carbon, but we do not have a distribution of clay. So we are on that because we have the information in the logging record. We are building that model in order to make a proper blending and try to avoid being over, let us say, 6% total clays into the feed of the processing plant. Right now, we have certain days where we are at 8% and maybe sometimes 9% clays. That is when we start getting problems along with the rainy season. Today, in the dry season, this is not going to be a problem.
Tanya Jakusconek: Thank you for the explanation on that. And the second item, maybe someone can answer for me. As you are aware, with the volatility of oil prices and other things going on around the world, I just wanted to understand how you in Peru are managing supplies coming into the country, and I just want to understand whether you are seeing any constraints in getting supplies into the country and/or to your mine sites, like we did in COVID times. Are you having to increase your working capital or stockpile selective consumables? So maybe just where are you seeing any pressures on the supply chain front for your company, if any?
Daniel Dominguez Vera: Thank you, Tanya. We have not seen any major disturbance or problems in the supply chain. Diesel has increased in price rather than being difficult to get more diesel. The price has increased 50%, and also this component, diesel, is around 5% of the total OpEx that we have, so the percentage of increase in our costs is around 2% to 2.5%. We think that this will be the case for the entire year. Regarding other supplies like cyanide or sulfuric acid, we do not see any problems in the supply of these reagents or supplies. We have in our mines a one-month stock for continuous operation, and also in Lima, in the Port of Callao, we have an additional three months for our critical supplies. So we do not foresee any problems with any supplies.
Tanya Jakusconek: So, Daniel, it is not a supply issue getting to site; it is more a cost issue of it is just going to cost you more.
Daniel Dominguez Vera: Yes, exactly.
Tanya Jakusconek: Okay. And then my final question, if I can, and someone in the team wants to take this. Maybe for us sitting in North America, just a flavor of, with the elections going on, what is happening in Peru from both fiscal regime and maybe social as well with a new leader in place. Can someone give us some insights into the politics of Peru?
Leandro Garcia: Thank you, Tanya. Well, finally, the two candidates that will pass for the ballot are not finally defined. Keiko Fujimori is for sure there, but they are still counting the votes for Rafael López Aliaga and Roberto Sanchez. The important thing here is the new composition of the Senate and the Deputy Chamber. If you see those results, you will appreciate a decision that is more center and center-right. We do not foresee any changes in legislation. Of course, there will be some demands, but we feel comfortable with how this new Congress has been elected. That will warrant some kind of peace in terms of new ideas or things that normally social unrest can ask, no? The campaign has been quite easy; there have not been many problems in the regions. So we are confident that business area and business performance will go ahead well in the following years.
Tanya Jakusconek: So can we assume that there are no changes to taxes and/or royalties?
Leandro Garcia: There should be some voices that would ask, but I do not think that the composition of the new Congress will pass that call.
Tanya Jakusconek: Okay. And what about on the permitting front? Is there the potential for this new government to make permitting and getting permits a lot easier?
Leandro Garcia: Well, it depends on who is finally the winner. We try always to communicate the difficulty and the bureaucracy and the length that it takes to be granted a permit. It is a common ask from the mining sector and the investor sector to facilitate the granting of permits, right?
Tanya Jakusconek: Yeah, we all hope, right? Thank you. Thank you for taking my questions.
Leandro Garcia: Thank you, Tanya.
Operator: The next question comes from Cesar Perez-Novoa with BTIG. Please go ahead.
Cesar Perez-Novoa: Yep. Going back to the San Gabriel contained clay, if I heard correctly, when you install the screen mesh panel, which I think is what you are going to use, will that have an impact over OpEx at the mine, and will this have any additional CapEx spend? I guess not, but I want to confirm if this is technically feasible or not.
Juan Carlos Ortiz: We are in the stage of developing the options. As I mentioned, we have two options: to have what we call a banana screen—that is something that has a shape with a higher slope at the beginning—and then you wash water on top. That machine costs in the order of $300 thousand. Probably, at the rule of thumb, three-to-one installed, the CapEx for that piece of machinery working on-site is around $1 million. That is going to be the additional capital we need to include to be sure that clay is not going to be a problem in the crushing and grinding circuit in the future. From the operating point of view, maybe, I do not know, $0.10 per ton. That is a very, very small additional cost that we expect to run these additional circuits in San Gabriel. So it is more the CapEx of the year, an additional $1 million, to add this component to the flow sheet of the processing plant.
Cesar Perez-Novoa: Okay. No, that is very clear. Thank you very much. It is essentially an irrelevant cost for the incremental spend. Thank you.
Juan Carlos Ortiz: Thank you.
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: Thank you, operator. The fourth question comes from Jordan Rosano from Calpasap: Have you seen some cost pressures related to personnel expenses? Is this something you expect to continue through the year? And could you provide more color on the main drivers behind this increase, and whether it is related to wage adjustments, higher headcount, contractor costs, or the ramp-up of San Gabriel?
Daniel Dominguez Vera: The increase in the costs related to personnel is coming from the higher workers' profit sharing. As we are having higher profits in Compañía de Minas Buenaventura S.A.A. and in El Brocal, we have to pay more for workers' profit sharing. It has increased from $2.5 million last year to almost $19 million this year. Most of this goes to the cost of sales for each mine, and also it goes to administrative expenses. In terms of wages, there have been no major increases; we have increased only with the inflation rate. And in terms of headcount in the mines, specifically El Brocal, we have additional operators for new equipment, but these have not made a big difference compared to last year. So basically, the difference is due to the higher workers' profit sharing.
Sebastian Valencia: Thank you, Daniel. And the final question comes from Jaime Yalde from Cinno R Capital: Is Compañía de Minas Buenaventura S.A.A.’s corporate policy still to remain unhedged in copper, gold, and silver?
Daniel Dominguez Vera: Yes, Sebastian. Yes. Our policy right now is that we can hedge, but we prefer not to hedge. We will go with the market. As probably everybody is aware, we had a lot of problems with Tornado in the past for some hedging, and as far as I know, any audit from Sunat of the mining companies is positive. We prefer not to hedge for the time being.
Sebastian Valencia: 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 closing remarks.
Leandro Garcia: Thank you. Before we finish, I want to thank Alejandro Hermoza, our Vice President of Sustainability. This is his last conference call with us. He has been with us almost 25 years. He has been an important pillar of this team. And of course, we foresee Alex to continue being part of our family. The doors always are open, and we will miss a couple of coffees with you. Thank you, Alex, for all your effort, and the best for you in this new stage. And to all who were with us today, I would like to thank you for your time and effort dedicated to joining us. You are greatly appreciated. Thank you again and have a wonderful day.
Operator: Ladies and gentlemen, that concludes Compañía de Minas Buenaventura S.A.A.’s first quarter 2026 Earnings Results Conference Call. We would like to thank you again for your participation. You may now disconnect.