Buenaventura Announces Third Quarter and Nine-month 2023 Results

Compañia de Minas Buenaventura S.A.A. (“Buenaventura” or “the Company”) (NYSE: BVN; Lima Stock Exchange: BUE.LM), Peru’s largest publicly-traded precious metals mining company, today announced results for the third quarter (3Q23) and nine-month period ended September 30, 2023 (9M23). All figures have been prepared in accordance with IFRS (International Financial Reporting Standards) on a non-GAAP basis and are stated in U.S. dollars (US$).

Third Quarter and Nine-Month 2023 Highlights:

• 3Q23 EBITDA from direct operations was US$ 53.3 million, compared to US$ 22.2 million reported in 3Q22. 9M23 EBITDA from direct operations reached US$ 121.9 million, compared to US$ 96.3 million reported in 9M22. 2022 EBITDA does not include US$ 300 million resulting from the sale of Buenaventura's 43.65% stake in Yanacocha.
• 3Q23 net loss from direct operations reached US$ 24.3 million, compared to a US$ 22.6 million net loss for the same period in 2022. 9M23 net income from direct operations was US$ 42.5 million, compared to US$ 67.7 million net income for the 9M22.
• Buenaventura recorded US$ 51.3 million in Depreciation and Amortization for the 3Q23: US$ 17.6 million was due to deferred stripping related to the final open pit expansion works, which was completely mined in September 2023, when mining activities at Colquijirca’s Tajo Norte mine were suspended.
• Buenaventura's 9M23 consolidated copper production increased 35% YoY. Zinc production decreased by 65% YoY, lead decreased by 61% YoY, silver decreased by 19% YoY, and gold decreased by 17% YoY.
• Buenaventura's cash position reached US$ 221.8 million and net debt decreased to US$ 493.7 million with an average maturity of 2.7 years by quarter’s end, September 30, 2023.
• 3Q23 capital expenditures were US$ 59.8 million, compared to US$ 37.2 million for the same period in 2022. 9M23 capital expenditures reached US$ 145.7 million, compared to US$ 93.2 million in 9M22, and includes US$ 46.5 million related to the San Gabriel Project and US$ 31.4 million related to the Yumpag Project.
• The Yumpag project’s Environmental Impact Assessment (EIA) was approved on September 7, 2023. The Company promptly submitted a request to the Peruvian Ministry of Energy and Mines to obtain the necessary authorizations to initiate the deposit’s exploitation. However, 4Q23 targeted production initiation remains unchanged, as resumed activities at the Uchucchacua processing plant also enables Buenaventura to perform metallurgical tests for up to 124,600 tons of ore from the Yumpag project’s pilot stope.
• Cerro Verde paid a total dividend of US$ 250 million on August 3, 2023. Buenaventura received US$ 49.0 million relative to its stake in Cerro Verde.

Financial Highlights (in millions of US$, except EPS figures):

Operating Revenues

3Q23 net sales were US$ 211.3 million, compared to US$ 195.4 million in 3Q22; a year-on-year increase resulting from improved copper volume sold.

The Company recorded a negative US$ 15.3 million provisional price adjustment for the accumulated first nine months of 2023. This is comprised of US$ 13.7 million in fair value of accounts receivables and US$ 1.5 million in adjustments to prior period liquidations. This compares to a negative US$ 40.4 million adjustment for the accumulated first nine months of 2022.

Production and Operating Costs

Buenaventura’s 3Q23 equity gold production was 43,449 ounces, compared to 55,837 ounces produced in 3Q22, primarily due to decreased production at Tambomayo and La Zanja. 3Q23 silver production decreased by 12% primarily due to Julcani and Tambomayo performance. 3Q23 lead and zinc production decreased by 66% and 62%, respectively, due to decreased production at Tambomayo and El Brocal. The Company’s 3Q23 equity copper production was 34,168 MT, compared to 28,909 MT produced in 3Q22, due to increased production at El Brocal and Cerro Verde.

Tambomayo (100% owned by Buenaventura)

Tambomayo 3Q23 gold production decreased 41% year on year aligned with the Company’s mine plan for this asset, while silver production decreased 45% year on year and by 12% for the first nine months of 2023 compared to the same period of 2022 due to lower than planned mining rate within the mine's upper zone, which required more extensive rehabilitation to enable access to high-grade ore. Cost Applicable to Sales (CAS) increased to 1,891 US$/Oz in 3Q23 from 982 US$/Oz in 3Q22. This increase was primarily due to decreased volume sold in 3Q23.

Orcopampa (100% owned by Buenaventura)

3Q23 gold production was in line with 3Q22 and with the planned mining sequence. Cost Applicable to Sales (CAS) increased to 970 US$/Oz in 3Q23, compared to 803 US$/Oz in 3Q22, primarily due to lower gold grades in 2023 compared to 2022.

La Zanja (100% owned by Buenaventura)

3Q23 gold production decreased by 81% year on year, in line with 2023 estimates, as mining and ore stockpiling was suspended in 4Q22. 3Q23 Cost Applicable to Sales (CAS) was 1,140 US$/Oz, a decrease from 1,892 US$/Oz gold production in 3Q22 as only pad leaching and water treatment are being performed at the property, as well as exploration.

Coimolache (40.10% owned by Buenaventura)

Coimolache 3Q23 gold production increased by 8% year-over-year, due to increased treated ore, higher gold grades and accelerated gold extraction from the leach pad. Cost Applicable to Sales (CAS) therefore decreased to 1,083 US$/Oz in 3Q23, from 1,710 US$/Oz in 3Q22.

Uchucchacua (100% owned by Buenaventura)

Buenaventura submitted Uchucchacua’s updated mine plan to the Peruvian Ministry of Energy and Mines on August 28, 2023. Buenaventura initiated a short ore processing campaign at the processing plant, ensuring plant operational readiness to process ore from Uchucchacua and Yumpag during the 4Q23. Exploration and mine development progressed as scheduled during 3Q23.

The Yumpag project’s Environmental Impact Assessment (EIA) was approved on September 7, 2023. The Company promptly submitted a request to the Peruvian Ministry of Energy and Mines to obtain the necessary authorizations to initiate the deposit’s exploitation. 4Q23 targeted production initiation remains unchanged, as resumed activities at the Uchucchacua processing plant also enables Buenaventura to perform metallurgical tests for up to 124,600 tons of ore from the Yumpag project’s pilot stope.

Yumpag’s ore concentrates will be processed at the Rio Seco plant to reduce manganese content. The Rio Seco plant is scheduled to resume operations in November 2023.

Julcani (100% owned by Buenaventura)

3Q23 silver production decreased 38% year on year primarily due to a negative geology reconciliation with decreased treated ore. 3Q23 Cost Applicable to Sales (CAS) was 26.09 US$/Oz, compared to 13.80 US$/Oz in 2Q22; an 89% year on year increase due to decreased volume sold.

Exploration and development of Julcani’s Rosario sector at 610 level began during 3Q23. This new zone includes gold and copper which Buenaventura will begin processing during the fourth quarter 2023. The Company will also submit a related reserves and resources analysis by year end 2023.

El Brocal (61.43% owned by Buenaventura)

El Brocal 3Q23 copper production increased by 55% year on year as underground mine production ramp-up continued ahead of expectations during the quarter. Transitional ore from the open pit also had a higher than estimated copper content with improved metallurgical recovery. Buenaventura maintains its targeted underground mine 10,000 tpd exploitation rate for 4Q23.

3Q23 silver production increased by 90% year on year in line with the 2023 planned mining sequence.

3Q23 zinc production decreased by 50% year on year as part as the planned transition to copper from polymetallic ore. On October 3, 2023, Buenaventura submitted a notice to the Peruvian Ministry of Energy and Mines (MINEM) for the temporary suspension of mining activities at Colquijirca’s Tajo Norte mine for up to three years due to approval delay of Colquijirca’s Modification of Environmental Impact Assessment. Buenaventura expects to now process 100% of the El Brocal lead and zinc inventories by year end 2023 with the remaining open pit copper inventories expected in 1Q24. In the 4Q23, the company will recognize the deferred stripping costs associated with lead and zinc inventories, which are expected to be in line with the amortization reported in the 3Q23.

2Q23 Copper Cost Applicable to Sales (CAS) decreased by 10% year on year due to increased volume sold.

Share in Associated Companies

Buenaventura’s share in associated companies was US$ 46.4 million in 3Q23, compared with US$ 20.4 million in 3Q22, comprised of:

CERRO VERDE (19.58% owned by Buenaventura)

3Q23 copper production was 115,441 MT, 22,603 MT of which is attributable to Buenaventura; a 5% increase as compared to 109,655 MT produced in 3Q22, 21,471 MT of which was attributable to Buenaventura.

Cerro Verde reported US$ 225.5 million net income in 3Q23, compared to US$ 105.5 million net income in 3Q22. This is primarily due to a 40% year on year net sales increase, primarily due to a higher average realized copper price of US$ 3.77 per pound in the third quarter of 2023, compared to US$ 3.14 per pound in the third quarter of 2022, as well as an 11% increase in volume of copper sold. This increase was partially offset by a year-on-year cost of sales increase due to an inventory variation, and higher tax paid during the quarter.

3Q23 Cerro Verde capital expenditures were US$ 70.8 million.

COIMOLACHE (40.10% owned by Buenaventura)

Coimolache reported US$ 6.6 million in 3Q23 net income, compared to US$ 1.0 million net loss in 3Q22.

SAN GABRIEL Project

3Q23 and 9M23 capital expenditures was US$ 22.4 million and US$ 46.5 million, respectively, primarily related to earthworks and construction-related water dam excavation. The Company has also invested an additional US$ 40.0 million in the project as advance payment for equipment manufacturing, primarily related to the processing plant. This amount is reported within Buenaventura’s financial statements as accounts receivable and will be reclassified as CAPEX once the equipment arrives at the project.

The underground mining tender process was completed during 3Q23. Personnel hiring and mobilization is in progress, and contractors will begin field works during 4Q23.

Company Description

Compañía de Minas Buenaventura S.A.A. is Peru’s largest, publicly traded precious and base metals Company and a major holder of mining rights in Peru. The Company is engaged in the exploration, mining development, processing and trade of gold, silver and other base metals via wholly-owned mines and through its participation in joint venture projects. Buenaventura currently operates several mines in Peru (Orcopampa*, Uchucchacua*, Julcani*, Tambomayo*, La Zanja*, El Brocal and Coimolache).

The Company owns 19.58% of Sociedad Minera Cerro Verde, an important Peruvian copper producer (a partnership with Freeport-McMorRan Inc. and Sumitomo Corporation).

For a printed version of the Company’s 2022 Form 20-F, please contact the investor relations contacts on page 1 of this report or download the PDF format file from the Company’s web site at www.buenaventura.com.

(*) Operations wholly owned by Buenaventura

Note on Forward-Looking Statements

This press release and related conference call contain, in addition to historical information, forward-looking statements including statements related to the Company’s ability to manage its business and liquidity during and after the COVID-19 pandemic, the impact of the COVID-19 pandemic on the Company’s results of operations, including net revenues, earnings and cash flows, the Company’s ability to reduce costs and capital spending in response to the COVID-19 pandemic if needed, the Company’s balance sheet, liquidity and inventory position throughout and following the COVID-19 pandemic, the Company’s prospects for financial performance, growth and achievement of its long-term growth algorithm following the COVID-19 pandemic, future dividends and share repurchases.

This press release may also contain forward-looking information (as defined in the U.S. Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties, including those concerning the Company’s, Cerro Verde’s costs and expenses, results of exploration, the continued improving efficiency of operations, prevailing market prices of gold, silver, copper and other metals mined, the success of joint ventures, estimates of future explorations, development and production, subsidiaries’ plans for capital expenditures, estimates of reserves and Peruvian political, economic, social and legal developments. These forward-looking statements reflect the Company’s view with respect to the Company’s, Cerro Verde’s future financial performance. Actual results could differ materially from those projected in the forward-looking statements as a result of a variety of factors discussed elsewhere in this Press Release.

**Tables to follow**

APPENDIX 1

APPENDIX 2

APPENDIX 3: Adjusted EBITDA Reconciliation (in thousand US$)

*Cerro Verde’s EBITDA accounts for D&A related to the capitalization of the stripping.

Note:

EBITDA (Buenaventura Direct Operations) consists of earnings before net interest, taxes, depreciation and amortization, share in associated companies, net, loss on currency exchange difference, other, net, provision for workers’ profit sharing and provision for long-term officers’ compensation.

EBITDA (including associated companies) consists of EBITDA (Buenaventura Direct Operations), plus (1) Buenaventura’s equity share of EBITDA (Cerro Verde), plus (2) Buenaventura’s equity share of EBITDA (Coimolache). All EBITDA mentioned were similarly calculated using financial information provided to Buenaventura by the associated companies.

Buenaventura presents EBITDA (Buenaventura Direct Operations) and EBITDA (including affiliates) to provide further information with respect to its operating performance and the operating performance of its equity investees, the affiliates. EBITDA (Buenaventura Direct Operations) and EBITDA (including affiliates) are not a measure of financial performance under IFRS and may not be comparable to similarly titled measures of other companies. You should not consider EBITDA (Buenaventura Direct Operations) and EBITDA (including affiliates) as alternatives to operating income or net income determined in accordance with IFRS, as an indicator of Buenaventura’s, affiliates operating performance, or as an alternative to cash flows from operating activities.

APPENDIX 4: COST APPLICABLE TO SALES RECONCILIATION

Reconciliation of Costs Applicable to Sales and Cost Applicable to Sales per Unit Sold

Cost applicable to sales consists of cost of sales, excluding depreciation and amortization, plus selling expenses. Cost applicable to sales per unit sold for each mine consists of cost applicable to sales for a particular metal produced at a given mine divided by the volume of such metal produced at such mine in the specified period. We note that cost applicable to sales is not directly comparable to the cash operating cost figures disclosed in previously furnished earnings releases.

Cost applicable to sales and Cost applicable to sales per unit of mineral sold are not measures of financial performance under IFRS and may not be comparable to similarly titled measures of other companies. We consider Cost applicable to sales and Cost applicable to sales per unit of mineral sold to be key measures in managing and evaluating our operating performance. These measures are widely reported in the precious metals industry as a benchmark for performance, but do not have standardized meanings. You should not consider Cost applicable to sales or Cost applicable to sales per unit of mineral sold as alternatives to cost of sales determined in accordance with IFRS, as indicators of our operating performance. Cost applicable to sales and Cost applicable to sales per unit of mineral sold are calculated without adjusting for by-product revenue amounts.

Operations’ Cost applicable to sales does not include operating cost for those months during which Buenaventura’s operations were suspended due to COVID-19, as these have been classified as “Unabsorbed costs due to production stoppage” within the financial statements.

The tables below set forth (i) a reconciliation of consolidated Cost of sales, excluding depreciation and amortization to consolidated Cost applicable to sales, (ii) reconciliations of the components of Cost applicable to sales (by mine and mineral) to the corresponding consolidated line items set forth on our consolidated statements of profit or loss for the three and twelve months ended December 31, 2022 and 2021 and (iii) reconciliations of Cost of sales, excluding depreciation and amortization to Cost applicable to sales for each of our mining units. The amounts set forth in Cost applicable to sales and Cost applicable to sales per unit sold for each mine and mineral indicated in the tables below can be reconciled to the amounts set forth on our consolidated statements of profit or loss for the three and twelve months ended December 31, 2021 and 2022 by reference to the reconciliations of Cost of sales, excluding depreciation and amortization (by mine and mineral), Selling Expenses (by mine and metal) expenses and Exploration in units in operations (by mine and mineral) to consolidated Cost of sales, excluding depreciation and amortization, consolidated Selling Expenses and consolidated Exploration in units in operations expenses, respectively, set forth below.