Compania de Minas Buenaventura SAA (BVN) 2004 Q4 法說會逐字稿

[Good morning] everyone and welcome to the Buenaventura conference. Just a reminder, today's call is being recorded. At this time for opening remarks and introductions, I will turn the call over to Peter Majeski.

Thank you Mark, and good morning everyone. Welcome to Compania de Minas Buenaventura's fourth quarter 2004 earnings conference call. Joining 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, March 3. If you have not yet received a copy, please call us here in New York at 212 406 3690, and we will email it to you immediately.

Before we begin, I would like to remind you that any forward-looking statements made today by Buenaventura's management are subject to various conditions that 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 to all, and thank you for attending this conference call. We are pleased to report, in 2004, record production and financial results for Buenaventura. Buenaventura's net income was $55.6m in this quarter. Operating income in this quarter was $27.1m, 209% higher than the fourth quarter of 2003.

EBITDA was $141.7m, which represented a 76% increase when compared to the fourth quarter of 2003. EBITDA from Buenaventura's direct operations was $34.7m, 86% higher than the fourth quarter of 2003.

These positive results were mainly driven by higher output and lower cash operating costs in Orcopampa and Colquijirca, as well as a 59% decrease in general and administrative expenses.

In the fourth quarter of 2004, operating revenues were $93.6m, an increase of 32% when compared to the fourth quarter of 2003. This was mainly the result of higher volumes of gold, silver, zinc, lead, salt and higher realized silver, lead and zinc prices. In addition, royalty income increased 25% due to higher Yanacocha sales.

The accumulated operating revenues for 2004 were $316m, a 22% increase compared to 2003. Our equity production from the accumulated period of 2004 was 330,850 ounces of gold, and this does not include our participation in Yanacocha, and 12.791m ounces of silver. This represented an increase of 14% in gold production and an increase of 8% in our silver production compared to 2003.

In Orcopampa, for the full year of 2004, total gold production was 211,388 ounces, a 17% increase when compared to 2003 production. The cash operating costs decreased 28% from $179 per ounce in the fourth quarter of 2003, to $128 per ounce in the fourth quarter of 2004. This reduction is explained by the cyanidation process, which began in March, increasing gold recovery and avoiding concentrate treatment charges, as well as reducing sales expenses. In Orcopampa 130,000 gold ounces of reserves were added in 2004, in addition to the depletion of the year, and this represents an increase of 23% in reserves when compared to 2003.

In Uchucchacua, for the full year of 2004, total silver production was 9.8m ounces, a 3% increase when compared to 2003 production. Silver cash operating cost in the fourth quarter of 2004 was $2.89 per ounce of silver, a 2% decrease when compared to the same quarter of 2003. Silver reserves at Uchucchacua as of December 31, 2004 were 67.4m ounces, a 4% increase when compared with 64.6m ounces in 2003, including, of course, the depletion during the year.

In Antapite, for the full year 2004, total production was 97,000 ounces, a 15% increase when compared to 84,000 ounces in 2003. Gold cash operating cost in the fourth quarter 2004 was $187 per ounce, a 15% increase when compared to $163 per ounce in the fourth quarter of 2003, due to higher diesel fuel costs, and mine preparation and development costs.

In Colquijirca, part of the Brocal company, for the full year of 2004, total zinc production was 57,000 metric tonnes, a 3% increase when compared to 2003 production. In the case of silver, total production increased 17%, from 2.8m ounces in 2003, to 3.4m in 2004.

Zinc cash operating costs decreased 42% from $741 per metric ton in the fourth quarter of 2003, to $430 per metric ton in the fourth quarter of 2004. The by-product contribution from higher lead and silver prices to the concentrate value allowed this significant reduction in the cash operating cost.

In Yanacocha, going to the non-consolidated affiliates, gold production for the accumulated period of 2004 was 3m ounces of gold, an increase of 6% when compared to 2.8m ounces in 2003.

Gold cash cost in Yanacocha during the fourth quarter of 2004 was $136 per ounce, which represented no variation when compared with the fourth quarter of 2003. Full year cash cost was $147 per ounce for 2004, a 14% increase compared to the $129 per ounce in 2003.

This quarter, Buenaventura's net income was $55.6m, representing 44 cents of dollar per share. This figure includes a loss of $13.6m from change in the fair value of derivative instruments, in accordance with IAS39 for derivative instruments, as well as realized income from sales of future production of $6.6m.

We are pleased to report also, good exploration results. At Poracota, we have been able to delineate 1.7m tons with 11 grams per ton of gold. Poracota is located only 30 kilometers from our Orcopampa operation. One of the diamond drill holes got a 1.2 meter intercept with 16.8 grams per ton of gold, 9.3 ounces of silver per ton, 10.1% of copper and 1 meter intercept with 28 grams per ton of gold, 24.9 ounces of silver per ton and 3.5% of copper.

In La Zanja we have continued our exploration regardless the events that took some violent people into our camp, but we have had some interesting results, and essentially we can report 17.4m tons with 0.88 grams per ton of gold and 5.67 grams per ton of silver in oxides. The Metallurgical testing resulted in a 66% cyanidation recovery, and we expect that there is a possibility to reach a recovery of 75%.

We will continue working in La Zanja as much as we are allowed, but we expect to improve our relationship with the local community and continue with our exploration.

In Marcapunta, in the Brocal company, we started the decline construction, and we have reached 320 meters with 200 meters remaining to start the infill drilling campaign and 500 meters to get to the mineralized areas. We expect to complete the geological assessment of the area within the next 18 months.

In terms of Board resolutions, during the March 3, yesterday meeting of the Board of Directors, it was decided to call for a shareholders' meeting for March 31, 2005, where we will propose to approve the annual report and the financial statements as of December 31, 2004, approve the proposed cash dividend payment of $0.18 per share, 18 cents of dollar per share, appoint external auditors, elect our Board members, the Board of Directors, as the by-laws of Buenaventura contemplate for the next 3 years, and the approval and amend the Company by-laws to permit virtual Board meetings, which is not contemplated currently in our by-laws.

With this, we are open to questions. We have here in our room, Mr. Alberto Benavides, the Chairman of the Company, we have Mr. Carlos Galvez, our Chief Financial Officer, Mr. Umberto Rodriquez, our Comptroller and Mr. Fernando [Espa], our Vice President for Commercial Issues. With this we are open to any questions that you may have.

Thank you very much. The question and answers session will be conducted electronically. [OPERATOR INSTRUCTIONS]. We will take as many questions as time allows. Also for those of you that are using speaker phone please ensure that your mute function is off so that we can receive your signal. We will pause one moment as we assemble our roster. Our first question today will come from Alberto Arias from Goldman Sachs.

Good morning and congratulations on the strong results for the fourth quarter. I have a few questions with regards to the Poracota exploration results. Could you give us a little bit more details about the structural characteristics of the reserves that have been found? The [indiscernible] ore bodies, what's the weight of the structures that we are talking about? And how close are you to do a feasibility study on Poracota?

Thank you Alberto for the question. Essentially when we have intercept some sort of ore bodies in the way of [mantos], these are not veins, this is an ore body. But of course there is the structural setting shows that there may be also some veins that we could intercept with these 2 tunnels that we are driving, 2 parallel tunnels, which will enable us to conserve the reserves and, of course, infill drill from underground in the area of Poracota.

We have still some targets, not only in Poracota, but in the area of Soras, which is next to Poracota, and as I mentioned earlier in my presentation, this whole area is not more than 30 kilometers from our Orcopampa mine.

In terms of the feasibility study, we believe that we have to still do some more exploration, but I would not be surprised that we can we start feasibility by year end this year. We are quite excited and the operators of Buenaventura are confident that they can make a mine in essentially in the short term.

Then I have a follow up question on La Zanja, you talked about 2 new areas called Turmalina and Cerro Campana and you show some very interesting drill hole intercepts. Could you update us in terms of what is the situation with La Zanja, because we got the impression that Buenaventura was putting La Zanja on hold until these social issues get resolved, but now you are presenting these as one of the key highlights for exploration results of 2004. Are you -- do you think that you [get difficulties] these other areas without facing the same social problems as you faced in the fourth quarter?

No. These areas are in the same area of La Zanja, so we would have to solve all these social issues before we are able to get into the property. We do expect to get back in April, when the rainy season is over, to try to do some exploration work.

In the meantime, we have been having contact with the communities further from the mine, further from the property in the coast. In the area of Chiclayo we have had some conversations with the regional president of Lambayeque, which is the region to the coast from Cajamarca, and we have had some good reactions, positive reactions. And then, of course, we have continuing talking to the communities nearby the La Zanja, so we will expect to get to better terms with them.

As I say, we cannot assure that we can get into the property at full speed immediately, but we are in better terms, if I may say, and we have good indications we have the support of the government, and the support of some local authorities, and we are working hard on these, [soft] issues.

Okay thank you.

And next we have Victor Flores with HSBC.

Thank you, good morning. I was hoping that you could give us a bit more sense on the size of the research you expect from Poracota. You have given us a number is the press release. There isn't anything yet in reserves. Is this the 1.7m tons at 11g the entire resource, or is there more there? And when do you expect this to go into reserves?

Well, as you know, Victor we like to say never under-estimate nature. And we really expect to find much more. There are indications, good indications. Essentially the reason for driving these 2 tunnels is to make these resources into reserves. We believe that we can easily convert these into reserves with these couple of tunnels, and we continue exploring regionally, but for the time being this is what we have, and it is certainly a good indication that the whole area has mineralization potential.

Right, thank you. And just a follow up question on exploration. Could you give us a sense for what the budget will be for 2005, and how it will be distributed among the key projects? And are there any new projects in the portfolio that you would care to talk about at this time?

The total amount of exploration outside of our own operation is going to be in the order of $17m, of which we will be -- our share, because we include in that the share of our joint venture partner, will be in the order of 10 to $12m. We essentially would like to fine tune and concentrate in some of the projects that we have been talking about.

We will be very pleased if we can define further Poracota, if we can get back to La Zanja full speed, and certainly Marcapunta. We are also working on [Tanta Watai] social issues, [soft] issues, and certainly in the surroundings of the whole area of Orcopampa and the surroundings of Uchucchacua. We are also exploring in the surroundings of Antapite, which is showing to be a new area for mining in Peru, and with some potential for finding new deposits.

Excellent. Thank you very much.

Daniel Altman with Bear Stearns has our next question.

Hi, good morning. Obviously the other issue beyond La Zanja is Cerro Quilish that has the market very concerned. I wonder if you can give us an update in terms of how your relations are going there and whether you think Cerro Quilish could be re-added or included again in reserves, say this time next year.

Also I wanted to ask about Yanacocha - the decline in cash costs, and it looks like a pretty big increase in the margin. Is this related to the increase in production in the fourth quarter or is this really a sustainable reduction in cash costs? Thanks.

In terms of Quilish we were attending the Nesbitt Burns Bank of Montreal conference early this week, and I had the same question of course. This is a personal answer. It is difficult to say what is going to happen in Cerro Quilish, but our impression is that the relationship with the local community, with the [Dunta] may have been impacted with the canal interruptions, are getting more comfortable with the work that Yanacocha are performing.

Essentially there is this water canal called [La Canjana] that has been re-built and today you can see water flowing through that canal. The farmers are more comfortable with that situation. In addition to that, and this is a personal comment of course, in Cerro Quilish we have 3.7m ounces in reserves and we, talking to geologists, I would not be surprised that that could be doubled easily. That will give you a resource, perhaps reserves, in the order of 8m ounces.

That is essentially the same size of Pierina, and I would whether - Pierina in Alto Chicama, 8m ounces no - and I wonder whether a poor country like Peru can afford not to develop a resource of that type. 3.7m ounces of gold in reserves means $1.4b in production, and of that, of course, there will be a lot of taxes that will be paid, not only to the central government, but also to the region. And I think that is a strong argument, if I may say, and I don't want to cynical, but a strong argument for any region to support the development of the Cerro Quilish area.

Going to the costs, if these costs in the fourth quarter of Yanacocha are sustainable or not, I think essentially we will see higher costs in Yanacocha than the fourth quarter of 2004, but probably lower than the average of 2004 for the whole year. I don't know if Carlos Galvez wants to add something on this.

This reduction in cost was due basically to efficiencies in the operation, because if you compare the [grades on the triple ratio] in Yanacocha's operation between the third quarter and fourth quarter, there are not big differences. You have, for instance, the grades in the third quarter of 0.96, and the grades in the fourth quarter 1.02 (ph) grams, so it's not a big deal. And the [triple] ratio increased slightly from 0.35 to 0.87.

So efficiencies in the operation is the main driver for this reduction. Even working with very high prices of diesel fuel, because the price of fuel went up during the last 2 quarters. So well, as Roque mentioned, only an efficiency in these operations can keep working these costs.

Okay, great. Thanks very much.

Tony Lesiak, UBS, next question.

I'd like to start off with a couple of questions on the quarter. If I look at the cash at the end of the quarter on the balance sheet, it does not equal the cash from the cash flow statements of PEN25m. Is that currency translation adjustment?

No, it is not. Basically it is just a technical issue you know that we have to report as an investment, certain deposits that we get for terms beyond 90 days. So technically we had a deposit in the bank for 120 days, and that was considered like that, as an investment, and not as cash at the bank.

Okay, thanks Carlos. A quick question on the variation between the year's sales and production in the quarter. How do you see that going forward in the next couple of quarters?

Well you know that only considering the oil concentrates that we produced in Uchucchacua, and in the Brocal we are affected, you know, the way we can deliver that. In terms of gold production this is not an issue because we normally deliver whatever we produce in a very fluid way to the refinery [indiscernible], and well, we sell that quarterly.

Okay. Don't forget (ph) there was a big change. I mean you produced about 90,000 ounces and you sold about 125,000. I'm just saying is there any more inventory adjustment to happen here or should we just look at production equals sales going forward?

That was something that happened the beginning of the third quarter to the fourth quarter, but nothing special.

Okay. Could you comment quickly on your tax rate for '05?

Well the tax rate will be as it is established at 30% income tax. We are not going to have anything in addition. What we do intend to share is the fact that the royalty, the new royalty established by the law in year 2004 seems to be that we should have paid, at the end of February, while the decision of the Company was not to pay, because there is a constitutional procedure that we applied before the constitutional tribunal, and we are expecting the final decision of this tribunal to pay or not to pay.

And I guess, finally, just the production guidance for 2005.

Well in terms of the production, we expect to continue to produce in Orcopampa levels higher than 200,000 probably, and our focus is 220,000 ounces. In the case of Antapite, we continue working on the basis of 100,000 ounces of gold. In the case of the minor operations in gold like Shila, Paula, Ishihuinca, altogether we expect that we can produce between 40 to 50,000 ounces altogether.

In the case of Uchucchacua, we will produce around 10m ounces. You know that we are working, I said this -- it has been already announced in this cyanidation plant for Uchucchacua's operation, so we should start operation at this plant increasing around 1m ounces a year, 2006. So basically this is the scheme.

Great, thank you very much.

Andrea Weinberg of Merrill Lynch has a question.

Hi good morning Carlos. Roque congratulations on your results. Two questions, one on the quarter. Your costs increased 33% quarter-over-quarter, and production increased 6%. I just would like to have an explanation of what happened with the costs and if that's sustainable going forward.

And the second question will be on Cerro Verde. When do you expect the [details of the investment] will be approved and the capital increase will happen.

The increasing costs in - what in Yanacocha you mean, or what?

No, on Buenaventura.

Tell me are you talking about the cost that will [inaudible] in our P&L?

Yes exactly --

Okay. Well this is [moving] to our sales. You know that we are reporting the cost to the extent that we sell, we allocate the cost to the sales. So this is the cost of goods sold and not the production cost. So in here are volumes that could vary if we increase our sales.

And because you have such a decrease in inventory quarter-over-quarter, that's why the cost increase so much?

Yes.

Okay.

In terms of Cerro Verde, we reported yesterday to the Board of Directors of Buenaventura that the negotiations between Phelps Dodge and Sumitomo, because Sumitomo will also have a participation in Phelps Dodge, have reached an agreement, and we expect to have, and this is a tentative date -- on March 15, we expect to have finalized all the negotiations.

Then after Cerro Verde will have to call for a shareholders' meeting, and following Peruvian legislation, it will take 25 calendar days after that to finalize the increase in capital, and, of course, Buenaventura, putting our money into the company. So probably it will take altogether about 100 days, or 3 months, until we put our money, and we reach the percentage, whatever we finally get in Cerro Verde.

But I want to say that the people of Phelps Dodge are still interested in Sumitomo and Buenaventura participating in this very, very important project. If I may say, we consider that Cerro Verde is probably the largest unexploited copper sulfate undeveloped in the world as of today. It is a huge reserve of copper ores, and we believe that it is in the best interests of Buenaventura, and its shareholders to invest in this property.

May I also use the opportunity, and I need to answer Mr. Flores on our investment in exploration. One that I have not mentioned is Rio Narcea area, where we have reached an agreement with this company to exploit in Northern Spain, and this is an area that we believe has potential.

Aubery Paverd, our Board member, brought this to our attention, and we have potentially agreed to explore these gold veins, and we believe we have the expertise to contribute to adding value to this property. And we expect to invest altogether in the order of $5m in the next couple of years in Rio Narcea as well.

Some slight detail that we have signed this letter of intent. We are [really] just waiting for the final arrangements to get the final agreement.

Okay, thank you.

Next we will take a question from John Bridges with JP Morgan.

Good morning Roque, everybody. You mentioned government support to try and put some ground rules around the relationship with the local people around the mines. I wonder if you could give us a bit of detail as to, you know, how much help they are giving you?

Well John, you have to bear in mind that there are still a lot of responsible people in the world and [even] in Peru.

I never doubted it Roque.

Thank you. The thing is, the situation, the news coming from Peru were not the most positive ones, and this had to do, not only with Cajamarca and the surroundings of Yanacocha, La Zanja, but also some opposition to projects, such as the [taking down] of Cerro Verde, or the exploration of Las Bambas by [exstrata].

This is a clear opposition really with very little ground against mining in Peru, and this is not different to many other places in the world. The problem that we were finding was that there was very little support from government, and essentially the people in the rural areas believing that the mining company could replace government in many respects.

So we, all in the mining industry, have been talking to the government and saying that they have to take a stronger position, and they have been trying to co-ordinate some positions between the communities, the NGOs, the Rondas Campesinas in the case of Northern Peru, and the mining companies, because it is not all to be blamed to the mining companies. There are political agendas that, of course, have to be very clearly stated, and I think we all are working in trying to solve all these problems.

Okay.

We are having a lot of support from the current minister, Mr. Sanchez, that it is a very humble person in the best terms of the word, a very knowledgeable man, coming from the Cerro de Pasco area. He himself is a metallurgical engineer, and I think he has a very positive and constructive attitude towards solving the problems.

That's very good to hear. The strength of your operations this quarter is very impressive. I just wondered in the vein type environment, how much more we can expect? I think this follows on from one of your previous questions.

Well, the thing is, we keep finding a lot of ore in Orcopampa. We keep finding ore in Uchucchacua. Antapite, as I have mentioned many times, is a new area for mining in Peru. Yanacocha continues to be an extraordinary mine, regardless of how spoiled the investment community may be of wanting to have the same costs as when we started.

But essentially we are a Company when you add it all together, that is producing in excess probably in 2005, in excess of 350,000 ounces from own direct operations. Our share in Yanacocha is producing silver, which is doing very well in the market. I think that you can expect at least Buenaventura's direct operation growing at a rate between 5 and 10% for the next couple of years.

To what extent was this a result of your re-investing cash flow out of Yanacocha into your own operations? Are we now seeing the peak benefit of that investment?

Well, you mention a word that we were discussing and should have mentioned that in our press release - the peak results. Well, what we wanted to say is record results, more than peak results.

You are a witness John that many times investors were saying that we were putting good money on top of bad money, or on top of bad assets. We were claiming for many many years that Buenaventura has been operating for 52 years, and that we know how to operate and that we know of the potential of some of the areas, that we are operating.

And in this respect, I think these results are simply showing what we were saying, and that we are delivering to the market what we said we were going to deliver. I think the areas where we are investing are areas of great potential. It may not be the big animal that is Yanacocha, but they are areas that really have a lot of potential. I think you will see further nice surprises in our own properties, and you will see that Buenaventura should get a value for their own operations.

Bear in mind that we will be producing from our direct operations a 350,000 ounces and excess of 12m ounces of silver, we are not getting value in the market for that production, and this is said by many many people. So I think you will see further development in this front.

Okay excellent. And then just coming back to the Yanacocha cost issue. You [once] did say that they have pulled ounces out of the inventory using carbon columns, so they would have run down the inventory at the end of the year. Would that have been a factor in bringing the cash costs down?

No John. You know that the cost of these ounces in inventory had been allocated before, and that was part of the cost of inventory.

So that's factored in, okay. Okay, excellent.

The carbon columns have been working already for a few months.

Okay. Anyway, great set of results and congratulations.

Thank you.

[OPERATOR INSTRUCTIONS]. Next we hear from Alonso Aramburu from Santander.

Yes, it's a follow up question to the royalty tax. If the decision goes against you, what do you expect to be the total cost to you in '05?

May I touch on this subject if it goes against us? The thing is there have been already 7 resolutions in favor of different, other companies, other mining companies. We have said that the resolution for Buenaventura will follow the same trend. In terms of costs Carlos -

We have already charged in our financial statements as of December 2004, you have the P&L total amount of $2m that, well, due to the [production of these] this year. So we are considering that, we are not saying that, we are just expecting what is going to happen with this final resolution of the tribunal (ph).

So you think a $2m is roughly the cost for a full year?

Yes basically it is. You know that we have mentioned the fact that the average royalty rate for Buenaventura will be in the order of 1.7%, because you know that you apply gradually 1% to the first [$60m] sales, 2% to the next $50m and 10% (ph) in excess of $120m. And the net effect to bottom line, you have to take away the income tax [shown] and the work and participation profits effect. Because it's tax deductible.

Okay thank you.

[OPERATOR INSTRUCTIONS]. Alberto Arias from Goldman Sachs has a follow up question.

Yes just a couple of follow up questions. You know I don't know if you could just help us a bit to understand the reserve decline in Yanacocha in 2004. We have seen that -- the market was expecting that Cerro Quilish was going to be removed from reserves, but if you analyze the performance of exploration of Yanacocha in the year 2004, we were disappointed by seeing some of the projects, like Juliana (ph) or Antonio being removed from reserves.

And it seems that the capital that was put in exploration in 2004 didn't lead to a lot of new discoveries. It was pretty much Cerro, or Minas Conga, the one that allowed you to sustain the total reserves. Could you elaborate in terms of what happened in Yanacocha's exploration 2004 to lead to these results?

Well it is obvious Alberto that it is becoming more and more difficult to find these outside low-cost reserves in Yanacocha, but regardless of that, we have been successful in finding some higher grade ores, probably not in terms of volume, the same size as the ones that we have known for some years. But essentially there is the expectation that we will have to go to the sulfate, both in Yanacocha and Minas Conga. Essentially what this shows is that there is still a lot of potential.

Certainly we were hit by the fact of not being able to explore further in Cerro Quilish, because this, in addition to reducing the 3.7m ounces in reserves, did not permit us to find more ounces that we believe are in Cerro Quilish if we would have been able to in-fill drill.

Essentially we are working in Yanacocha towards the future, and I'm saying a 5 to 10 year period on the developing of the sulfate which will give us ore for many many years to come.

Okay, just a follow up question with regards to El Brocal, and the Marcapunta project. Given the high copper price, I wonder if there is some line that you can give us in terms of the timetable for the potential development of that ore body? Remember that there is some metallurgical issues that needed to be resolved. If you could elaborate in terms of what are the prospects of resolving some of those metallurgical issues, and just an update in general for Marcapunta?

Well, as we mentioned, it will take 18 months to finalize this decline, this ramp. And, of course, being able to develop some of these deeper resources. On the other hand, we have gone back to the old area of the mine, and we have been assaying some of the old areas, and we have found that the copper is not all [energized], but there are some areas with lower arsenic. And essentially, with the deeper ores, and these old areas of the mine, we may [raise] the possibility of extracting some ore, and using some of the idle capability capacity that there is in the area.

You know that there are some concentration plants that are idle at this point in time, and having the train going through Marcapunta, essentially, it is a possibility that we may exploit some of these copper ores, hydrate and make some money. And, of course, by doing this, doing all the metallurgical testing that we will need in the event of a feasibility study for the whole of Marcapunta.

Marcapunta is looking, as you know, as a deposit that has some [energized] but has also some [strip] copper and also some [calphonite] -- and I'm being corrected here. And, of course, some oxite with gold content. So I will not be surprised, and I'm not in a position to say at this point in time, but I will not be surprised that in the short term we may get some production, copper production, from Marcapunta.

Okay. And one final question, with regards to Cerro Verde. The terms of the capital increase - are you going to use the price in the Lima stock exchange of Cerro Verde as a reference for the capital increase, or is this something that we should be looking for the current settlement between, I guess, the [Japanese] smelter and Phelps Dodge? Has that been the reference for the terms of the capital increase that you would need to come up with?

We will use it as a reference, but we essentially have agreed on some sort of pricing of this transaction. Essentially, you -- it is not a surprise that before we do the increase in capital we will probably distribute a huge dividend from Cerro Verde in order to benefit those shareholders that are currently shareholders of Cerro Verde, and then after, the increase in capital.

But essentially, it will be a reference, but not necessarily a very precise reference.

Okay, great. Thank you.

I understand there are no questions in the queue. I will now turn the conference back over the Mr. Roque Benavides for any closing or additional remarks.

Well thank you to all of you. It has been a few years since we started with these conference calls, and we have very loyal followers, and we hope you will continue following all the efforts that the whole [administration] of Buenaventura and Yanacocha are doing.

And in that respect, as has become traditional, we will be traveling to New York, and we will be presenting the results of Buenaventura on Monday at lunchtime, at the New York Stock Exchange. And if any of you have not received an invitation, please contact I-advize, for any of you that would like to join us.

We will also be visiting some investors in the eastern coast of the U.S., and then after probably attending a number of conferences, to be as much in touch with our investors as possible.

In any event, thank you very much from the Buenaventura team to all of you for joining us in this conference call. Good morning.

And that does conclude our conference call. Thank you for joining us today.