Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- EBITDA from direct operations increased by $85 million compared to the previous year, driven by strong results from Yumpag and El Brocal.
- Net income for Q2 2024 reached $74 million, a significant improvement from last year's net loss of $5 million.
- Silver production increased to 4 million ounces in Q2 2024, up from 1.7 million ounces in the same period last year.
- Cerro Verde announced a new dividend of $300 million, with $59 million to be distributed to Buenaventura, contributing to financial performance.
- The company's leverage ratio improved to 1.4 times, reflecting effective debt management and growing EBITDA.
Negative Points
- Copper production decreased by 22% year over year due to the voluntary suspension of El Brocal's processing plant.
- Gold production decreased by 9% year over year, attributed to mining lower grades at Orcopampa and Tambomayo mines.
- All-in sustaining costs increased for gold production due to lower grades at Tambomayo and Orcopampa.
- The San Gabriel project has experienced cost escalations, with total project costs now estimated at $650 million.
- El Brocal's processing plant was suspended for 16 days due to protests by nearby communities, impacting production.
Q & A Highlights
Q: What are the expectations for dividends from Cerro Verde in the fourth quarter and the outlook for cash flow generation?
A: Dividends from Cerro Verde will depend on prices and production levels. Expectations remain between $120 million and $150 million for the fiscal year 2024. (Daniel Dominguez Vera, Vice President - Finance and Administration)
Q: Can you provide an update on the CapEx figure for the San Gabriel project?
A: The total project cost has been updated to $650 million, with $280 million allocated for 2024 and $200 million for 2025. This increase is mainly due to escalating prices and changes in project sequence. (Renzo Macher C., Vice President - Projects and Innovation)
Q: How do you see the cost trends at your gold mines, given the recent increase in costs and production issues?
A: Ore grades at Orcopampa and Tambomayo are declining, which has impacted costs. We are addressing these issues and expect to provide more details in the third quarter conference call. (Leandro Garcia Raggio, Chief Executive Officer)
Q: Could you comment on Buenaventura's inflows and outflows of capital for this year, including potential asset sales and CapEx commitments?
A: Expected EBITDA for the year is around $300 million to $320 million. Dividends from Cerro Verde are expected to be between $120 million and $150 million. Asset sales are projected to bring in $150 million to $180 million. Total CapEx for the year is estimated at $380 million to $400 million, including $280 million for San Gabriel. (Daniel Dominguez Vera, Vice President - Finance and Administration)
Q: How will costs evolve at El Brocal in the second half of the year, and what impact will the copper ore inventory have?
A: Costs at El Brocal are expected to return to $5,300 to $5,500 per tonne in the third and fourth quarters. The copper ore inventory is valued at an EBITDA of $5 million to $6 million, which will be realized between July and August. (Daniel Dominguez Vera, Vice President - Finance and Administration)
Q: Can you provide details on the development progress and costs at San Gabriel, particularly for the underground work?
A: Development is progressing with an advance rate of 200 meters per month, expected to increase to 400 meters per month with additional crews. The average cost is around $4,000 per meter. We expect to start producing ore in the first quarter of next year. (Juan Carlos Ortiz Zevallos, Vice President - Operations)
Q: Is the $200 million revolving credit facility still in place, and will it be used for financing San Gabriel?
A: The $200 million revolving credit facility is still in place and undrawn. We do not expect to use it this year, and possibly not next year, depending on copper prices and asset sales. (Daniel Dominguez Vera, Vice President - Finance and Administration)
Q: Can you break down the $280 million CapEx for San Gabriel this year and the $200 million for next year?
A: Approximately $50 million is allocated for underground development over the next year. The remaining CapEx is for surface infrastructure and other construction activities. (Daniel Dominguez Vera, Vice President - Finance and Administration)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
