Compania de Minas Buenaventura SAA (BVN) 2004 Q2 法說會逐字稿

Good day everyone and welcome to the Minas (indiscernible) Buenaventura Q2 earnings release conference call. As a reminder, today’s call is being recorded. [OPERATOR INSTRUCTIONS] At this time, for opening remarks I would like to turn the conference over to Peter Majesky with iAdvise Corporate Communications. Please go ahead, Mr Majesky.

Thank you, Augusta and good morning everyone. Welcome to Compania de Minas Buenaventura’s second quarter 2004 earnings conference call. With us today from Lima are Mr Roque Benavides, Chief Executive Officer, and Mr Carlos Galvez, Chief Financial Officer. They will be discussing Buenaventura’s results for the press release distributed yesterday evening, Thursday, July 22. If you have not received the copy, please call us in New York at (212) 406 3690 and we will email it to you immediately.

We would like to remind you that any forward-looking statements made today by Buenaventura’s management are subject to various conditions and may differ materially. These conditions are outlined in the last page of the Company’s press release in the disclaimer. We ask that you refer to it for guidance.

It is now my pleasure to turn the call over to Mr Roque Benavides. Mr Benavides, you may begin.

Good morning and thank you for attending this conference. This quarter, Buenaventura’s net income was $66.1m, an increase of 141% over the second quarter of 2003. This figure includes a gain in derivative instruments of $28.2m.

Our operating income this quarter was $22.8m, 102% higher than the second quarter of 2003, while total EBITDA was $88.1m, which represents a 10% increase when compared to the second quarter of 2003. This growth was due to a higher contribution of Buenaventura’s direct operations, driven by higher production, sales and lower cash cost in Orcopampa, Uchucchacua and El Brocal. As a result, EBITDA from Buenaventura’s U.S. operations rose 53%.

In terms of our operating revenues, in the second quarter of 2004 operating revenue was $74.2m, an increase of 23% when compared to the second quarter of 2003. This was mainly a result of a 26% increase in net sales due to higher realized metal prices, along with increasing sales contents.

In Orcopampa, total gold production for the second quarter of 2004 was 49,593 ounces, a 14% increase when compared to the second quarter of 2003. For the six-month period of 2004, total production was 96,881 ounces, an 11% increase when compared to the same period of 2003.

Cash operating cost decreased 34% from $178 per ounce in the second quarter of 2003 to $118 per ounce during this quarter, primarily due to the full operation of the new cyanidation plant, which allowed an increase – and this allowed an increase of 7% in gold recovery, the avoidance of charges for concentrate treatment, deductions and penalties, as well as a reduction in sales expenses, basically from the concentrate transportation.

In Uchucchacua, total silver production for the second quarter of 2004 increased 4% when compared with the second quarter of 2003, from 2,374,000 ounces to 2,474,000 ounces.

Cash operating costs in the second quarter of 2004 decreased 4% compared to the second quarter of 2003, from $2.99 per ounce to $2.87 per ounce of silver.

In Antapite, total production for the second quarter of 2004 was 22,900 ounces of gold, a 21 increase when compared with 18,900 ounces in the second quarter of 2003.

Cash operating costs in the second quarter of 2004 increased 3% from $167 per ounce of gold in the second quarter of 2003 to $172 per ounce in the second quarter of 2004. This increase was mainly attributed to higher mine preparation expenses to feed the new expanded plant capacity.

The operating income was for the quarter $22.8m, 102% increase compared to Q2 2003, due to higher revenues and lower operating costs.

In terms of our Non-Consolidated Affiliates, Buenaventura’s income in the second quarter of 2004 was $27.2m, a 17% decrease when compared to the second quarter of 2003, mainly attributed to a decrease in Yanacocha’s net income.

In Yanacocha in the second quarter of 2004, gold production was 611,993 ounces of gold, a decrease of 10% when compared to the second quarter of 2003. This reduction is explained by a 27% lower grade during this quarter compared to the second quarter of 2003.

Cash operating cost in Yanacocha was $159 per ounce, which represents an increase of 25% compared to $127 per ounce in the second quarter of 2003, due to an increase in the stripping ratio and the lower grade mentioned above.

It is important to mention that production and cash costs are in line with the six-month period budget and that the significant difference year-over-year was due to an exceptional second quarter of 2003.

In terms of our net income, this quarter Buenaventura’s net income was $66.1m, representing 141% increase as compared to second quarter of 2003. This includes a credit of $28.2m related to the change in the hedge book value.

We have a number of explorations going on, and I am sure there will be a number of questions and Cesar Vidal is here with us to answer any questions you may have.

We have included some results of those explorations for your opinion. We have a number of project developments in Uchucchacua, Orcopampa, Antapite and the Consorcio Energetico de Huancavelica, which we have also stated in the press release.

Yesterday, the Board of Directors of Buenaventura approved the financial statements as of June 30, 2004. In that meeting Mr Jorge Benavides informed the Board his retirement. Mr Benavides has been a Board member for 45 years and during this time has contributed to the development and growth of the Company. The Board of Directors agreed to accept the retirement of Mr Jorge Benavides thanking him for all his efforts and hard work for the benefit of the Company, and appointed Mr Roque Benavides, who is currently President and CEO of the Company.

May I call your attention also to the fact that, as of today, we have a new web page in place which we invite all of you to look at it.

With this, may I turn to any questions that you may have, and we will answer all of those. Thank you.

[OPERATOR INSTRUCTIONS] Our first question comes from Alberto Arias from Goldman Sachs.

Yes, good morning, gentlemen, a few questions. The first one is with regards to Yanacocha and the operating results. The decline in ore grades that we saw there in the second quarter, what should we expect for the remaining part of the year? Is this decline in ore grade something that is temporary, or should we be lowering our expectation on the ore grade going forward?

Good morning, Alberto. It is Carlos Galvez. You know, this performance of Yanacocha in the first half of this year as Roque mentioned was according to the plan, and according to this we suppose that Yanacocha will resume a grade higher than 0.9 grams per ton in the third and fourth quarter.

Okay, and the reason why it was 0.75 during the second quarter? Was that something intentional given the strength that you had in the first quarter, or was there something unusual that you encountered there?

Sorry, the grade was 0.5, was 0.7.

0.7.

0.72.

That’s what it did.

Okay, but that was according to the plan? There was no operating surprise that figure, that decline in ore grade?

No, not really. The thing is it is as planned, and the thing is it was the second quarter of 2003 was an exceptional quarter. This is simply in line with the mine plan.

Okay. Second question, in your press release you talk about pre-construction expenses on Poracota, Orcopampa and La Zanja, are you starting to extend some of those developments costs? What is going to be the accounting of these construction costs for La Zanja? At which point in time are you going to start capitalizing this, or is it going to be expense throughout the periods of construction?

Well, part of this pre-construction investment is exploration yet. So, this is expense and the permit (ph) is this is the only thing that we can capitalize. So, there is nothing important in terms of capital decision or in this pre-construction expense.

Okay, a final question with regard to these new royalties that have been approved by Congress and the President. What is the impact on the economic feasibility of Minas Conga? You were expecting that the feasibility study was going to be completed either by the end of the year or early next year, but given that it is such a low grade ore valley, do you think that the viability of that project is since significantly hurt by these new royalties?

Well, the thing is, Alberto, it is still not clear whether these royalties are going to pass, in my mind at least. It may have been approved by Parliament, but today we have received news that they have approved a number of exceptions for a number of projects, mainly Las Bambas, which has already a royalty and Parliament has approved that there would be no new royalties to one during the same project. So, a number of exceptions has been approved in that respect.

In addition to that, you may be also aware of this, in Chile, which is the path that we are following, if I may say, the royalties have not been approved by Parliament. So, we may expect some changes in the royalties in Peru.

Certainly, we have not made the calculations for Minas Conga. We are in the exploration. In La Zanja, in Minas Conga, we are in the exploration process. It will certainly, if it goes ahead, have an impact on the economics, but I do not think we can get into details at this point in time.

Alright, thank you.

Thank you. We will take our next question from John Bridges with JP Morgan.

Hi, Roque, Carlos. There was talk before about the first half of the year being weak at Yanacocha because of the rainy season, but the focus now seems to be on grades. So, I just wonder to what extent grades were a factor there? Then I have another question on cyanide.

John, you know, mining plants do not respond only to this rainy season. It is the way that the miner and geologists have to plan this operation. Last year, for instance, you had the three first quarter a very strong quarter, and the last one was, according to the thoughts of analysts, a disappointing quarter, but, you know, this is not arithmetics (ph), it is mining.

Yes, I know. I understand. Then, on a more positive note, the progress that you have shown at Orcopampa with the new cyanide plant is a remarkable cut in costs. You are planning to put a cyanide plant at Uchucchacua and then I think there is another going in, could you give us a bit of background as to how you see those projects developing and the economic impact?

Well, as of today, we have full conurbation (ph) plans in Antapite. We have a full conurbation in Orcopampa, which has reflected this substantial reduction in cash costs, and we are working on the engineering of cyanidation plant for Uchucchacua as a tailing. We have to finalize some details before going ahead, but we are essentially working full speed on that project as well. Essentially, we believe that we add a lot of value by increasing the recovery rate and implementing new metallurgical processes to our operations.

Okay. So, the cyanide plant used treating the existing -- the tailings from the existing mine. Is that in operation at Uchucchacua?

Not yet, not yet. We are in the engineering of that project and it will be for the current tailing, certainly, but also in a second stage will be for the recovery of the silver content in the old tailings. You have to bear in mind that in Uchucchacua, we have 25m ounces in old tailings, which, as some analyst in one of our road shows mentioned, will mean that we will have to increase our reserves due to the recovery of these tailings, but that is, as I say, in a second stage.

Okay, have you got any sort of indication as to how much you expect your cash costs to fall at Uchucchacua once the cyanide plant is in place?

Well, we suppose that we could reduce around 7%-8% if we increase the recovery around 10%.

Okay, excellent. Thanks, a lot.

our next question comes from Geoff Stanley with BMO Nesbitt Burns.

Thank you and good morning, a couple of questions. Firstly, on La Zanja, could you elaborate a little bit for us on the likelihood of reserve increases there and you have some quite encouraging text referring to the probability of reserved growth there in (technical difficulty) and I was wondering if you could also elaborate on how the permitting process is progressing, in particular, with reference to permitting in general in Peru. There have been some issues with respect to permitting there and I was hoping you might be able to elaborate on that a bit for us as well.

Sorry, Geoff, this is Cesar Vidal.

Hi, Cesar. How are you?

Fine, thank you. Good morning to you. This is on La Zanja, we have more or less completed a 20 (indiscernible) program to [indiscernible] and find additional reserves to the south of Pampa Verde, which is one of the two prospects, and as of June, last month’s report, we had intersects that proved that there are extensions, blind extensions, of the day-lighting ore body that, as stated in the press release, gives us encouragement for an additional 20% or 30% in that particular part called Pampa Verde. We have found a cyanide extraction test and they are within the configuration of one open fifth, and it is still open to the south, so we are still drilling. We have expanded our program there. The 20%-30% expansion figure is in expectation not having seen half of the drill results yet, but the geology is favorable. The last intersects with information are good and we are doing it. That is in respect to Pampa Verde.

The other mineralized part with reserves is San Pedro Sur, and we have started, two weeks ago, the first two holes we immediately found in San Pedro Sur we have a very encouraging surface result. We have found [indiscernible] oxide concentrations along fractures that have not just a low grade but a high grade, 10 grams, up to 20 grams over 30 meters is our best result, and we keep our fingers crossed for the holes to prove that there is some punting and some low grade dissemination, or high grade sulphur. But, we cannot predict results. We will inform you in due time. But, exploration is extremely positive in La Zanja this year.

Very good.

As regards permitting, we have finalized the environmental impact study, it was filed and it returned for some observations that have been resolved. We are doing our social work too. We are doing a lot of campaigning in the area to convince authorities about the benefits of the projects in terms of infrastructure, in terms of labor, in terms of trades for the region and we are having positive responses but, of course, some exceptions that we have to identify and neutralize.

The final test for our permitting will be the public hearing that we expect to have some time in late August or September in Santa Cruz, which is the capital of the province, and, of course, this is a hearing where everyone has a right to say or object or criticize, and we will get, or hope to get, our social license for the project.

In general permitting has become a little bit more bureaucratic and a little bit more cumbersome in certain areas, Colquijirca in particular, and we are aware of that and we are making a specific effort to tap onto all the political and authorities and all the social communities to have our project move ahead on schedule, which we aim for introduction in the third quarter of 2005 with plenty of time, still on schedule. Our budget, exploration wise, will probably be short. This year’s budget is $1.7m, but given results we may -- we have been spending already $1m in the first half of the year. So, these results feel good. Well, we will probably go over that budget, but that is usual in exploration.

Very good. Turning to Antapite, costs are up a little bit there in preparation for plant expansion, could you elaborate for us as to how the expansion is progressing and the likely impact on costs once the expansion is fully up and running?

Well, we expanded the capacity of our production in Antapite and why we did it? Was to put the mine up to feed this expansion. So, that is why we had these additional expenses in preparation. For the future, we have started the engineering, or started the expansion plant in Antapite, but that will take some additional months.

Do you have a feel for the likely impact on costs once it is fully completed and up and running?

Yes, well, once we normalize our preparation rate to feed this plant, the cost will go down to 150 as usual.

Okay, great. That is all I have. Thank you, very much.

Our next question comes from TS Owen Associates, Terrence Brooklyn.

Thanks, just a couple of questions like before. What is the recovery on spending for the tailings at Uchucchacua?

Recovery from the tailings with cyanidation you mean, or the current recovery?

With cyanidation.

Cyanidation between 30% and 40%. We are currently throwing to the tailings dams close to 5 ounces per ton. So, we will be recovering something between 1.5 and 2 ounces additional per ton.

Just to come back to the six month period is over and your results are out, could you just review if you are changing your budgets or plans for the year 2004 for production and cost in operations?

No, not at all. As was mentioned, everything during the first half was according to budget. So, to maintain, for instance, in the case of Yanacocha there is 3m ounces production they just have to keep on working with the plan.

What was your [indiscernible] in Yanacocha in Q2? You mention it is high.

It was 0.39 which compares with 0.31 in second quarter 2003.

Okay.

So, it was around 25% 26% liquid.

Now, what is your estimate of grades for Yanacocha for the year with the second quarter out of the way?

The average grade should be around 0.85.

There is a lot of catching up to do in the second half.

Sorry?

You have some catching up to do in the second half.

Yes, well, as I mentioned, it should be higher than 0.9.

Yes, and Roque, congratulations for your appointment and happy retirement to Mr Benavides. Just coming to royalties, let us work backwards, how much is the Government trying to raise here? Let us cut all the exceptions and applications out of the way, how much are they trying to raise here, all said and done?

Well, we should not get into politics, but anyway this question of the royalties has become more of an emotional thing rather than a technical thing. The fact of the matter is that the calculations are that they are going to get up to $30m, and that is all, because there are a number of companies that have tax stability contracts and legal stability contracts that a royalty would not be applicable to them, at least for the next six to 10 years. So, in fact, whilst it is going to make this new royalties is about $30m, which is certainly a minute amount compared to the increase in income tax that will come because of the increase in prices.

Well, those numbers have been turned around and $30m, the Government is getting a lot of negative publicity, let me tell you that.

Well, I said initially we should not get into politics, but, at the end of the day, we all get into politics and certainly I fully agree with what you have said and what the market perceives from our Government that is changing the rules of the game, no? I would be very much interested to know what the reaction will be after everybody learns that in Chile the Parliament has turned it down, no?

Yes, yes. Fair enough, thank you for your time.

Next, we will go to Victor Flores with HSBC.

Thank you, good morning. I was hoping that perhaps Cesar could give us a little bit more flavor on the exploration for Poracota given -- can you hear me?

Yes.

Sorry, my question was whether Cesar could give us an update on Poracota?

Sure, Victor. How are you?

Good. How are you?

I am fine, thank you. Well, it is a pleasure for me to report that Poracota is our top exploration project this year given last year’s results. Our drilling was fortunate to find higher grade zones, at +5 grams. Here you have 100 meter drilling intervals. We are close to 2m tons with 10 grams per ton average, and this is a north east, south west spending (ph) zone that we are accessing quite rapidly with two areas (ph) at elevations 47.20 meters about sea level and 47.85. This, I think, is the measure of the confidence we have in this higher grade zone, because we are not just accessing with one tunnel, we are driving two tunnels at a time, and, in parallel, we are also extending that resource, or higher grade portion of the resource, to the south, with diamond drilling. To the south, surface becomes a little bit of an obstacle, so we are drilling longer holes. We will just finalize the first one of this year. It is a 600 meter deep hole. We are waiting for results, but we are confident that the structure is there and that the alteration and mineralization will finally, when we end up doing the next 15 holes, give us extensions to the south.

The upgrading of the road, there is a 30 kilometer road from Orcopampa to Poracota that is being finalized and an upgrading to link Orcopampa to Poracota, and, of course, we have to seriously face the timing of the option exercises. Let us not forget that Poracota is a prospect that we are evaluating from that [indiscernible] by south west gold company here in Peru, called Minera Poracota, and where Setcominco (ph) has 50%. We have two options to exercise. The recommendation is to exercise the first option as soon as possible, but I am sure that before year end you will have some news about that.

Excellent. So, it sounds like it is going actually very well?

I am satisfied with the way the way it is going so far, and, of course, in the tunnel, we are following one minor structure called the Fatima Vein, it is a filler zone, and in the first 20, 30 meters it was only running less than a run, now we are getting closer to the higher grade zone, we are 200 meters in, and the grades are 3 to 5 grams. So, we are going to see a progression in grades in the tunnel too, no? But, again, let us finish the year to report the entire program results.

Excellent. Thank you. If I could unfortunately turn back to politics and perhaps ask Roque to give us his sense as what the procedure will be going forward with respect to the royalty? I mean, I guess we were expecting that perhaps the Cabinet would come back with some recommendations with respect to the royalty. What is the actual process and how long do you think it will take?

Well, this is the case, I think this is the process that is going on. The Executive have to get through the number of changes, but essentially what we are waiting for is the regulations. How do we call it? The rules that will follow this law. We believe there will be some improvement within the bad price that we are getting, but, anyway, some improvements to the law through the new rules that may come from the Executive. In my mind, it is still not clear what is going to come out from this law.

So, unfortunately, it is still a bit uncertain?

Yes.

Okay, well, we will leave it for the politicians. Thank you, very, very much.

We will take our next question from Daniel Altman with Bear Stearns.

Hi, good morning. It is Daniel from Bear Stearns, just two questions. First of all, the change in grades from one quarter to another at Yanacocha, I wonder if you can explain whether that is voluntary or involuntary. How, I guess in simple terms, how it varies so much? My second question is if you can tell us what your working capital use was during the second quarter? I was having a hard time reconciling your in-flows with your out-flows.

Good morning, Dan. As you know, as was mentioned, we respond to a mining plan. So, this is the final result is what miners and geologists expected to find in this part of the mine.

Regarding the working capital was your second question?

Yes.

Well, working in Yanacocha?

You mean in Buenaventura as a whole or in Yanacocha?

No, for Buenaventura. I know that you received the dividends from Yanacocha and I know that you had cash in-flows. I was trying to work out where the cash went to during the quarter?

Well, I suppose that we are going to receive additional dividends during the second quarter, and those- -during the second half of the year, but we mean around $65m-$70m, and we will invest during this second half around $30m in the projects we have in progress right now.

Then, of course, yes, we have a very strong cash position, which will enable us to -- or is enabling us to look for new projects and opportunities. We are going to be very conscious in the way we use this cash and, certainly, we will continue with our dividend policy which was in place already for over seven years, no?

But, if I just, again, zeroing in on the second quarter , was there a major use of working capital during the quarter?

No.

No.

Okay. I will follow-up with you after, thanks.

We will now take our next question from Tony Lesiak with UBS.

Hi, gentlemen, a quick question on Yanacocha. In terms of the production for 2004, are you suggesting it is now closer to 3m ounces? Previously, if you look at Newmont in your press releases it was closer to 3.1m.

We are talking about 3m ounces.

3m is the new number?

Yes.

Okay. What are the recoveries you are expecting in the third and fourth quarter?

What is what, sorry?

The gold recoveries in Yanacocha that you are expecting in the third and fourth quarter?

The gold recoveries will continue to be the same as -- you see this as a [indiscernible] operation and there will not be substantial changes. The grades are the ones that are going to be higher in order to get to the 3m announced as a figure as of the end of the year.

Okay. No, because if I put in 0.9 grams per ton and assume a 70%, 71% recovery rate, that gets me back closer to 3.1, so I am just wondering if your recoveries are declining?

Well, the figure is something between 3m and 3.1m ounces, but I do not know if we can be as precise as to tell you exactly how much it is going to be, but it is going to be in that range.

Okay, and your cash cost forecast for the year from Yanacocha?

It is in the order of $145m-$146m.

That includes all the fees and royalties?

Yes, you are right.

The thing is Yanacocha has a tax stability contract and the new royalties are not going to be applicable to Yanacocha if those are in place in the next few months.

Okay. Quickly, on Orcopampa, with the decrease in the cash cost in the quarter, have you looked at costs revising your forecast for the year, or what number should we be using?

We will be producing very close to 200,000 ounces in Orcopampa at the same cash cost of this quarter.

So, it is below 120 an ounce?

Yes.

Okay. Finally, on the exploration expense that you are going to be putting through this year, could you give us what the totals would be for the year looking at the mine area exploration expense and the non-mine areas?

Well, in the mine areas, you know that these exploration costs are part of our operating cost. So, it is already included there, but in terms of the exploration in non-mines, non-operating units, Cesar--

I can comment we are expensing every dollar spent in exploration in recent times. The half year, the first semester, there has been an expense close to $6.5m. I need to also address the fact that we are spending another $2m from our partners in exploration Newmont, mainly in La Zanja, and Barrick in [indiscernible] and Gold Fields in a new joint venture called Pouchio (ph), but that is $2m from the partner, and we expect to spend another $5.5m in the second semester.

Okay, if I look at the expense statement here, exploration in non-operational areas, it indicates you spent about $3m in Q1, about $6m in Q2. So, I get about $9m, and then for the second half you are saying it is going to drop.

Well, so far we are in the process. In July, it is mid year. It is a month where we evaluate results form the individual projects and we approve the expansions of the budget. So, I cannot give you a firm figure. I am guessing it’s going to be $5.5m.

Okay, thank you very much.

We do have a follow-up question from Alberto Arias with Goldman Sachs.

Yes, maybe a few more details with regards to Orcopampa. You, in your press release talk about some intercepts at the deeper sections of the mine. Also, you talk about a connection of the Nazerino and Prometida mines to access -- and the deepening of the mines to access 700,000 ounces of reserves. How much of this development is incremental to the reserves and resources that you have already published? In other words, is this discovery a new area that could potentially increase the reserves estimate?

Sure, Alberto this high rate interest (technical difficulty) that we have listed are for holes 115 and 116 are in a new area. It was not tested in the past. They are, quite some of them, spectacular. You do not get five meter [indiscernible] with 6 ounces per ton every day, and this is basically reflected in new reserves as of mid-year, over 108,000 dry short ton just over an ounce per ton. So, we are pretty excited with this high grade nature of the depth extension of the ore body. The decline is being driven by Vanjian (ph) Monteyo, a contractor, 800 hundred meters from the deepest level down, and I am sure that we will see the shaft sinking in the near future too for another 300 meters. This is not just a common vein for us, it is a mineralized fault. Ground is heavy, it is high grade, yes. So, it is heavy ground for mining purposes, and it is full of gold pedurite (ph). This is unique and it is the first appearance in Peru, and we are pleasantly surprised with the depth extension. We already have 400 meters of good grade mineralization, anything from ½ an ounce to 1 ounce per ton. It is open at that. So, this is a new lesson for us and we will see how far we can get with good grades per depth, but certainly in the Nazareno vein, the grade seems to improve at depth.

So, this new area is part of Nazareno or is it part of the other one, Prometida?

No, this is part of the Nazareno structure, but the Nazareno structure, but the Nazareno structure, when you move to the west plays into a number of these three portions, we are no longer going along the vein. You can see in the tabulation of drill results, we are hitting three structures. Nazareno West is the straightforward extension of the known vein, but to the North we are finding other ore shoots that are discreet and separate, called Prosperidad and Lucy Piso. So, this is an area that is west of the known vein, but it is a discrete new ore shoots parallel to the Nazareno vein.

Okay, and how many drill holes have you drilled in this area to get the confidence of this, I think you said 108,000 metric tons?

For that, we do have the 35/40 level, which is fully developed now for the three ore shoots, Nazareno West, Prosperidad and Lucy Piso and results are very encouraging. That is where we get the best information for great continuity and the main ability to cyanidation and we have at least two holes at significant depths below the bottom levels. That is the data on which we base our estimate of another 100,000 tons. As usual, it is conservative.

Congratulations on the discovery. Hard work paid off. Thanks.

Thank you, we will now take our next question from John Bridges with JP Morgan.

Hi, just a follow-up on that. The only other place I can think of that has telaride (ph) gold is Calgourli(ph). I just wondered what the implications of this would be using that sort of model?

Well, I do not know about Calgourli. I would have to visit Calgourli to make a comparison, but, no, telaride systems are rare in the world, and in this particular one at Chigmo (ph) is new for us, so I do not have any analogies at the moment. We are busy just finding it and we are pleasantly surprised that it is getting better at depth and it is a miner’s dream and we will get into better grades as we move deeper to counter-balance the higher cost, and that is what we are finding so far. So, keep your fingers crossed.

I certainly will, thanks a lot.

Mr Benavides, there are no further questions at this time. I would like to turn the conference back over to you for any additional or closing remarks.

Well, once again, thank you for joining this conference call. We keep working very hard in Buenaventura in order to improve value and add value to our shareholders, and may I insist you visit our new web page. We have done a great effort in having the best information possible for all of you.

Thank you, very much and good morning.

Thank you and that does conclude our conference today. We would like to thank everybody for their participation. You may disconnect at this time.