Compania de Minas Buenaventura SAA (BVN) 2006 Q3 法說會逐字稿

Good day everyone. Welcome to the Minas Buenaventura Third Quarter Conference Call. Just a reminder, today's call is being recorded. At this time, for opening remarks and introductions I would like to turn the call over to Mr. Pete Majeski with I-advize Corporate Communications. Please go ahead, sir.

Thank you, Lisa and good morning everyone. Welcome to Compania de Minas Buenaventura's Third Quarter 2006 Earnings Conference Call. Joining us today from Lima are Mr. Roque Benavides, Chief Executive Officer; Mr. Carlos Galvez, Chief Financial Officer and other members of Buenaventura's senior management. They will be discussing Buenaventura's results per the press release distributed yesterday. If you have not yet received a copy, please call us in New York at 212-406-3694 and we will e-mail 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 and may differ materially. These conditions are outlined in the last page of the company's press release in the disclaimer and 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 welcome to all of you. This quarter, Buenaventura's net income was $82.4 million or $0.65 per ADS, which represents an increase of 66% when compared to third quarter '05. Operating income was $67.6 million, 241% higher than the figure recorded in the third quarter '05. Total EBITDA was $189 million, which represented a 49% increase when compared to third quarter '05. EBITDA for Buenaventura's direct operations was $65 million, $172 million higher than the third quarter '05.

In terms of the financial highlights, it is important to mention that our total revenues were increased quarter to quarter on a yearly basis 83%, 241% operating income and EBITDA from our direct operations, 172%. In terms of EBITDA, including Yanacocha and Cerro Verde, the increase was 49% and net income 66%. Earnings per share increased in 66% quarter to quarter on a yearly basis.

In terms of our operating highlights, our net sales increased quarter to quarter 95%. Average realized price was decrease of 3% quarter to quarter and the average realized price when including our Yanacocha participation increased 28% quarter to quarter on a yearly basis. The average realized price at the end of the day was 63% increase and the average -- sorry, this is for silver, for lead 29%, 178% increase in terms of zinc.

In terms of sales content, we have a 22% increase on a quarterly basis, including Yanacocha, a reduction of 16% and, of course, we have increased in terms of silver, lead and zinc.

In terms of our production and operating costs, we have increased our equity production by 8% in terms of gold, including Yanacocha reduction of 14% and we have increased in silver and lead with a small reduction in zinc. All of our operations have had an impact in terms of our cost, due to the exchange rate in Peruvian Nuevos Soles.

Essentially in Uchucchacua, the increase has been substantial due to a number of aspects, first of all the exchange rate, secondly, the higher supply consumption, mainly reagents for the new cyanidation plant and support materials. As you know, the cyanidation plant started this quarter, this past quarter, and there is a required number of adjustments and this also had an impact on the cost at this mine. We have had higher contractor expenses for preparation of a new area of the mine, the Huantajalla area, where we have built a raised borer and a raised climber that are building new facilities, new infrastructure in the mine. And then, higher commercial treatment charge escalators and deductions explained by higher zinc and silver prices, partially offset by higher lead and zinc by-product credit.

In terms of Antapite, we have also had somewhat higher cost, due essentially to higher prices for mine contractor labor. Certainly, the Colquijirca mine within the [Brocal] company, have had a 4% increase in terms of zinc production, but accompanied with the lead price, has had an excellent quarter and has contributed to the results that we are showing this morning.

In terms of operating expenses, we are reporting for the third quarter $8.4 million, a 17% decrease compared to 10.1 million reported in the third quarter '05. This decrease was mainly due to a lower long-term compensation program provision.

In terms of our exploration cost, in non-operational mine sites, during the third quarter '06, were $8.6 million, a 28% increase compared to 6.7 million during the third quarter '05. Cesar Vidal, our Chief Exploration Geologist, is with us and he can comment on that later.

In terms of the share in our -- our share in affiliated company, Buenaventura net income from non-consolidated affiliates was $64.8 million during the third quarter '06, an increase of 17% when compared to $55.5 million reported in the third quarter '05. This increase is explained by higher contributions from Cerro Verde, $22.6 million. Yanacocha's contribution for this quarter was $41.6 million. For the nine-month period of 2006, income from non-consolidated affiliates was $273 million, an increase of 83% to the $149 million reported in 2005.

At Yanacocha, in the third quarter '06, gold production was 605,000 ounces of gold, an increase of 21% when compared to third quarter '05. Gold production for the first nine-months period of 2006 was 2.156 million ounces, a decrease of 5% when compared with 2.268 million ounces reported in the first nine months of 2005. It is important to mention that the company continues to project full year production at 2.6 million ounces.

Gold cash cost at Yanacocha during the third quarter '06 was $217 per ounce, which represented a 47% increase compared to the gold cash cost of $148 in the third quarter '05. This is explained by an increase in consumables prices, as well as higher workers participation and royalties to third parties.

In terms of our total net income, this quarter, Buenaventura's net income was $82.4 million, representing $0.65 per ADS, a 66% increase when compared to $49.5 million reported in the third quarter '05. This was mainly due to higher operating revenues, as well as the important contribution from Cerro Verde, which offset the decrease in Yanacocha's net income. Accumulated net income for 2006 was $350 million, an increase of 85% when compared to $189 million in 2005.

We have some exploration results that you have received through our press release, mainly in Tantahuatay and El Milagro, among others and Cesar Vidal can comment on that later when we have some questions from you people.

In terms of project development, it is important to mention that at Uchucchacua, the deepening of the Carmen and Socorro mines and the construction of the master shaft from 4,060 meters level to 3,900 meters level is approximately 25% complete. The specialized contractor for the project was selected in August. Completion is expected by the second quarter '08, with a total investment of $10.3 million.

At Orcopampa, the auxiliary shaft to improve ventilation and ore transport in the Prometida area commenced during the second quarter and is currently 13% completed. The specialized contractor for the construction has been selected and total drifting at the end of the third quarter '06 was 380 meters. Total expected investment is $3.7 million. The expansion of the treatment plant to increase capacity from 1,200 metric tons to 1,800 metric tons commenced in May '06, while the completion date has been extended to December 2006. This expansion considers the addition of new grinding and milling. At the end of the third quarter '06, the project is 50% completed. The total expected investment is $4.7 million. The expansion of the tailing dam number 4, commenced in July. Completion is expected by the end of 2006 with a total investment of $5.9 million.

In Marcapunta within Brocal, in August exploration activities at the Marcapunta Oeste project were suspended due to a flooding. Pumping and drainage are currently in progress. It is important to mention that the flooding will only affect the underground activities of the Marcapunta Oeste project. The surface drilling program at Marcapunta Oeste will not be affected, nor will be the exportation activities at Colquijirca's current operations, or the exploration activities at the Marcapunta Norte area.

It is important also to mention that the new concentration plant for copper, the new facility, is finished. But we are waiting for permitting for the tailing pond for the copper processing plant. This is the only thing that is detaining us from starting production there of copper from Brocal.

Yesterday's board meeting approved the financial statement ended September 30, 2006, declared a cash dividend of $0.25 per share, or ADS, equivalent to 0.80 of Sole per ADS at today's exchange rate, to be paid in US currency on November 30, 2006, to shareholders of record on November 17, 2006, who purchased shares until November 14, 2006. It is also important to mention that we are calling for an extraordinary shareholders meeting to be held on December 4, to approve first the merger by absorption of Minas Poracota, where we exercised an option to acquire 25% on Teck Cominco and to approve, through shareholders meeting, the voluntary contribution for social responsibility expenses that has been negotiated with the government of Peru.

Also to mention that we are going to hold a shareholder meeting on November 2, and this is a formal one just to approve the merger from - with [Inmin Sur]. As you know, we bought the 22% remaining shares from other investors and today, Buenaventura is owner of 100% of Inmin Sur.

With this, may I pass to any questions that you may have. Thank you.

[OPERATOR INSTRUCTIONS] We will take our first question from Andrea Weinberg with Merrill Lynch.

Hi Roque and Carlos, good morning. First question is on [Cintaya]. It is very good news, it is very good to hear that you are being able to make progress in the exploration there. I just wanted to have an update of what could be the potential timeline on the development of the project? And also if you could give us an update on La Zanja would be very helpful.

I suppose that you mentioned Tantahuatay - you said Cintaya. That's all right. That is another company. No, the thing is, we have been very, very careful in terms of Tantahuatay and La Zanja in terms of social acceptance, as they call it now. The important thing is that we are drilling in both projects. We have had no confrontation at all with the local community. It is important to mention that in the current elections, municipal and regional elections in Tallamarca, no candidate has mentioned a word against or in favor of mining. This is a different environment to what we have lived in past elections. We believe that the situation in Tallamarca and elsewhere in Peru is improving, due to the effort that mining companies are doing.

To ask us to give you an exact date when we start building the project, is difficult to answer. It would not be right for us to say at this point in time. We have to evaluate the social front in order to answer that. The fact of the matter is that we are having good results in both La Zanja and Tantahuatay.

Okay. Just really quick on silver sales, silver production was really high but there is -- it seems like there were some shipment delays in the quarter or -- because silver sales were a lot lower than production? Any explanation there?

Hi, how are you? It is Carlos. Well, no, there was not actually a delay. It is only the way we formed the lots to deliver. Remember that those are concentrates, so we have to deliver in silver [bars]. So nothing special.

Okay, okay. Thank you.

We will go next to John Bridges with JPMorgan.

Hi Roque, everybody. What was the second vote at the shareholder meeting? I got the first one. Something with the government?

It is the voluntary contribution, you see, for the benefit of everybody. When this new administration got in power, they claim -- they knew that they could not increase taxation because of the taxes stability contract. So the alternative that they thought of and negotiated was that the companies voluntary contribute to social programs. This new contribution essentially is in excess of 3% of net sales for those that do not have taxes stabilization contract - yes, that do not have taxes stabilization contracts such as [Sol] in Peru and Buenaventura. And the same amount, but deducting whatever royalties are paid for those that -- sorry, sorry, sorry, the opposite way. For those that do not have taxes stabilization contracts, it is in excess of 3% of net sales. For those that do not have taxes stabilization contracts, Carlos, why don't you clarify that?

Great. The contribution is for those companies that have taxes stabilization agreements, they will pay 3.75% of their after-tax profit. I will take the opportunity to explain that we have already included in our report, $19 million provision within Yanacocha financial statements for this purpose. That means that the equity share at Buenaventura is 8 million soles. You can calculate the percentage or how many cents per ADR.

In the case of the companies that do not have taxes stabilization, really the contribution is exactly the same. But we can take away the after-tax effect of the royalties' contribution, up to 2% of this net profit. So, this is basically the equation.

Okay. Well, it seems to having beneficial effects on relationships already. And then, the cost structure at Uchucchacua, you say it has moved up. But where do you expect the cost structure at Uchucchacua to settle?

Well, basically we are trying to stabilize our cyanidation process in the new plant. We are basically fine-tuning there and we have an important, a pretty high consumption of supply so, as compared with the silver that we have to recover in the process. And this is the component that is improving the equation, sorry, this cash cost. We expect to surpass this issue in 60 days [or less].

So, where do you expect to - what sort of target have you given them?

Our target cost is in the order of $4 per ounce.

Okay, excellent. Thanks a lot, Carlos. Good luck.

We will go next to Rafael Urquia with Citigroup.

Yes, good morning. Good morning everyone. Could you please elaborate some more on the expected economic benefit from the projects that you mentioned in your press release? Basically, the Carmen and Socorro mines, that is at Uchucchacua and also the treatment plant and the expansion of the tailing dam at Orcopampa, please?

Well, the thing is, Uchucchacua requires to deepen the mine. The mineralization deepens and we have to build all the infrastructure, now that we have the resources. And of course, this will permit us to maintain the operation in the right way. We also are increasing our capacity to treat different type of ores. Essentially there are all type ores in the area of Uchucchacua and this new facility, this new cyanidation plant will also contribute to treat those ores. In addition to that, we are going to increase the recovery rate at the Uchucchacua mine by processing those tailings through this new facility. And in addition to that, the old tailings could be treated in the future. So, it is, I would say we are in an adjustment process, but we are looking for stable and long-term production for the Uchucchacua mine.

In the case of Orcopampa, as you know, we have also increased somewhat our capacity and we needed to build additional tailing facilities and that is the reason why we are investing in that project. Is there anything other that you asked too?

Well, that is basically it. But in the case of the Carmen and Socorro mines, what are the -- what is the importance of these mines in terms of increased production?

Well, Carmen and Socorro mines in Uchucchacua are essentially the main areas of the mine that has been in exploitation for many years. It is where we get most of our ore, almost 100% these days. And essentially, if we want to continue operating in Uchucchacua, we need to deepen the shaft in these two mines.

So, the work that are currently being conducted there are in order to maintain production at current levels or to maintain the life of mine at current levels?

Essentially, we are not forcing the mine. We like to have the same level of production and maybe increase it a little bit. But we have to do all this infrastructure in order to maintain production at that mine.

Okay. And how long do you expect all this work to continue?

As I said, in 2008, we will be finished with the sinking of the shaft. But, I would say that contractors' work in terms of ramps and other facilities will continue at a lower level, but will continue for the life of the mine.

Okay. Thank you very much.

We will go to Victor Flores with HSBC.

Thanks. Good morning. There is an item in the income statement of $9.2 million classified as other. Could you explain what that particular item was?

Hi, Victor. Well, exactly this is a provision that we have made in terms of reclamation. As you know, according to the Peruvian regulations, we have to make a provision for the work we have to carry out in order to shut down our operations. This is something that we have to do for the future at the end of the life of the mine. But we, in the case of certain operations, we used the life of mine such as [uncani and recuperara] that were in the process, we had to make this provision, which is a 9 million -- $8 and something million.

Okay. Thank you. And then just going back to the earlier comment about the provision for the voluntary contribution. If I understood correctly, Minera Yanacocha had a $19 million provision during the quarter, which was reflected in your equity-accounted earnings from that asset?

That is right. We have already provisioned the 9 first months of the -- against the 9 first months of profits. So the only thing that remains to be provisioned is for the next quarter results. This impacted, as I mentioned, about $0.07 per share our profit, no?

Okay, great. Great, thank you. And if perhaps I could indulge you and get Cesar Vidal to give us a few comments on exploration, particularly the new discovery at El Milagro?

Good morning, Victor. Certainly I am pleased to comment about the [two] One other prospect that we have informed about, [Santa Jatai] where we are doing the interim [reading] of [Scanara], that is giving us a good chance to improve the grade of the resource. We are showing you too a fairly good drilling result all the way to the surface. One with close to 90 meters at 1.5 grams gold with 5 finite extractions. The other one, 120 meters and a little bit over 2 grams per total gold, with close to 90% finite extraction. Both results are in the core of the system and are consistently higher than the average grade. We sort have been asked for that. Those will contribute to upgrade the resource.

There is also a chance that a portion of the deposit will deepen further. We are drilling for a deeper extension and I'm hopeful that we can grow the tonnage too.

El Milagro is a fairly new project. We have been working for 12 months there now and finally, I can speak about it since we have consolidated the claims. There were two provisions that belonged to third parties that we have been negotiating. Finally, we have them on board. And we have an aggressive drilling program at the moment, with four rigs and especially in the El Milagro zone itself.

This is an area where there was some previous underground exploration in the late 60s, early 70s, but fairly insignificant. And we are finding a natural and dense expansion of this limestone replacement deposit with Genoveva ore chute is the first one that we are drilling consistently at 50 meters center. We already have six intercepts. Three of those, we are showing in the press release. The perception for average weight of the Genoveva ore chute is six meters and the grade varies between 6 and 8% zinc, 1 and 4% lead, and anything from 1 to 10,000 per ton silver.

We have done, on two of these intercepts, metallurgical test work. We find that we can easily get plus 60% zinc concentrate with 80% recovery and floatation. The lead and silver will have to be dealt with a little bit later with higher-grade lead intercepts. But we are very encouraged with these initial results. We are also building a road and we are doing our permitting for next year so that we can start doing underground development as early as possible next year.

Great, thanks. And then just one quick follow-up. From a geological perspective, could you give us a sense of what El Milagro would compare to in terms of other known deposits?

Our closest analog in Peru would be Milpo or Atacocha.

Great. Thank you very much.

We will go next to Geoff Stanley with BMO Capital Markets.

Thank you very much and good morning gentlemen. A couple of questions, probably for Carlos initially. Can you tell me what the ETFs on the balance sheet are? There is about $60 million there. I was just wondering what kind of ETFs, are they gold or are they equity ETFs or?

Yes, well as we explained in our conference call, when Buenaventura bought some ETFs in order to capture the opportunity cost losses due to the fact that we have [slashed] our production, to explain that the price of gold was going up and up, we tried to put a cap on that. So this is the new reason and we bought the equivalent to 100,000 ounces and that --

Right, sorry. I arrived late on the call there. And the nature of the short-term financial instruments?

Well, this is just an investment that we have for the time being, because we have to make some decisions in terms of paying out cash dividends so that we are just announcing today and then we have to carry out several investments. So in the short-term, we are just buying some commercial papers with a very high rating, with a high liquidity, just to get certain profitability nearby.

Okay, very good. And perhaps I will move to more an operating question. You have construction underway at a number of different places, Uchucchacua, Orcopampa for example. Your silver, zinc and lead production was a little lower than our forecast. Obviously there is two possible reasons for that. You fell a little bit short or perhaps we were a little bit optimistic. But I am just wondering if the construction is impeding production in the near term and whether we are likely to see that stabilize in this current quarter and the next quarter or how construction is affecting production, I suppose, is the nature of the question?

I do not think it is construction that is affecting production. I think the grade of the zinc ore from Uchucchacua has come a little bit lower. But we expect to have this increasing in the future. The same applies for silver. We -- the deepening of the mine will permit us to increase production or at least maintain it at the normal levels that we were producing in the past. What is impeding the same level of production or would explain this decrease is essentially the deepening of the mine, I would say.

Okay, very good. So we can expect a modest recovery in coming quarters then?

Yes.

All right, excellent. Thank you Roque, Carlos.

And we will go next to Paul Rosenberg with Bear Stearns.

Hi, good morning. I was wondering if you could give us an update on Poracota in terms of the timing of the ounces and cash costs as well?

Well, we are certainly putting a lot of pressure and the whole organization is at full speed. Let me pass it to Cesar Vidal. He can make a comment on Poracota.

[In lines] at Poracota, we are certainly moving from the pure exploration phase of last year to a development phase. The mine is being developed. Reserves are being generated. We have close to 1,000 tons of 10 gram per ton material on site and we are starting to ship that to Orcopampa for storing and we certainly need to differentiate those ores that can be treated with the current facilities and it is only a fraction of the deposit and those that we will need an autoclave.

In terms of the autoclave technician, we have a consultant and we are budgeting for the future autoclave construction. We had two companies, one in South Africa, the other one in North America designing an autoclave specific to the Poracota ores. Now that we have consolidated Poracota, although this is certainly dependable on us alone and I can visualize some production from Poracota next year on the easily pre-milling gold portions of deposit. But I do not see any autoclave come at least in the next 12 months or 18 months. The autoclave is a reality for maybe 2008.

And in 2008, how many ounces do you expect in 2008?

The idea at Poracota is to produce in a full year, 100,000 ounces.

Okay, great.

We will go next to Jorge Rodriguez with Centura SAB.

Good morning. I have two questions. One is regarding the Marcapunta Norte's audit. I wanted to know if the demonstration treatment plant was already operational? And my other question is regarding [Genacucia's] cash cost and if you could give us some insight regarding future cast costs? I see that there is projection of $255 of cost of goods sold per ounce and I wanted to know how this relates to future cash cost?

Well, in the case of Marcapunta, there was this float in Marcapunta Norte, no? But we...

Marcapunta Norte. The question was about Marcapunta Norte, correct?

Exactly.

Well, in Marcapunta Norte, we have no problems. We have a mine that has been opened up. It has been permitted and there has been already -- the mill has been permitted and we have had a trial test with good results. We produced 20% copper concentrate with 6% arsenic, which is the maximum we can produce to sell it to [LaRoya] to [do run]. But at the moment, we cannot make a continuous production line there, because of the permit for the tailings disposal area. This is a tailings disposal area that has to be protected in permeable plastic on the base, because it is arsenical refuse. We anticipate the permit to come out any time now and then will we have this 1,000-ton-per-day operation from Marcapunta Norte as a continuous one.

The flood was in Marcapunta Oeste. It is a different position, two kilometers away and we are doing the hydrological studies to understand where are the sources for that groundwater, which is clean wate,r for your information and when we have the hydrologic evaluation completed, we will have to pump and access again the ore bodies there.

[inaudible] Yanacocha, Carlos.

Yes, well in terms of Yanacocha's future guidance, well, as you know, we have been announcing together with Newmont that production in year '07 will be about 1.6 million ounces. Basically, the cash cost per ton will be the same per ton. But, we are going to reduce the grades. And due to this, what we expect is a cash cost in the order of something in between 300 and 320, depending on the price of gold. As you may take into account, Yanacocha includes, we think, the cash cost, not only the royalties, that depend on the price, the worker participation in profits that depends on the price and so on. So, we are going to get something in the 300 to 320.

Okay. Thank you.

[OPERATOR INSTRUCTIONS] We will take a follow-up question from Rafael Urquia with Citigroup.

Yes, could you provide us with an update on your CapEx for next year?

Yes, well, in terms of the CapEx for our current operations, the replacement equipment is in the order of $10 million. In addition to that, we have to consider the specific project that we have already mentioned. Altogether, it will be in the order of 45 to $50 million. Talking about Buenaventura, that is operation CapEx.

Okay. And regarding the CapEx for Yanacocha and Cerro Verde, if you have any indication on that?

In the case of Yanacocha, the CapEx is about $250 million per year. And there is nothing special for next year in Yanacocha. In the case of Cerro Verde, after completing the project, the CapEx will be about 25 to $30 million per year.

And the completion date of the project, is it still for the end of this year, isn't it?

Well, we are awaiting for the final word of the operator. The operator, as you know, is Phelps Dodge. They are working -- they have done an outstanding job. But they will announce when it is completed.

Then, the 100,000 copper tons target for this year, is it still in place?

Yes, well, this is the order of magnitude for Cerro Verde's production, this is [former site] and this is the regular production. So this is okay.

Okay. Thank you.

We will take a follow-up question from John Bridges with JPMorgan.

On La Zanja, low in the grade. Does that increase your reserve base there? Have you added some ounces?

Could you repeat your question please?

Just wondering at La Zanja, you say that the grade was lower and that raised the cost per ounce. But has increased the reserve base that you are working with there at La Zanja?

John, good morning. This is Cesar Vidal.

Hi Cesar.

At La Zanja, we have, as you may have followed on the Denver Gold Forum, we have found an extension to the south of San Pedro, which has given us an extra 200,000 ounces at a grade of 0.68 grams per ton. So that will in fact bring the overall rate a little bit down. But in balance, in ounces is going up to 800,000 ounces. Does that answer your question?

Yes, absolutely. I must have been missing in action at that stage.

I was talking before about Tantahuatay where we are infill drilling [Cienega], finding some higher grades than the average an ounce, so we think that the average grade at Tantahuatay, [offside] gold project is likely to go up with this results.

Okay. Just moving away from Tantahuatay but based upon your progress there. You were having issues getting surface rights for San Gregorio, the zinc project. Is there any progress there?

There is no progress in San Gregorio and we do not foresee any progress in the upcoming future.

Okay, okay. Thanks a lot.

We will take a question from Alonso Aramburu with Santander.

Yes, good morning. Just a follow-up question on the voluntary contribution. I understand that this is a five-year deal with the government. Can you confirm that? And also, you also mentioned the 19 million provision for Yanacocha. Have you made any provisions for your own direct operations and do you expect any hits there in 2007?

It is only for the next five years and the contracts are being potentially finalized and we should be signing company by company with the government a contract. The provision in the case of Buenaventura is, Carlos?

It is only 700,000 soles per year.

Per year.

Well, this year, because we have to take away our royalties, which are different. The focus of this voluntary contribution is to [gain] a voluntary contribution for those companies that have taxes stabilization agreement,s basically. And that is the way that works.

And it is important also to mention that at Congress in Peru, there was the idea of imposing windfall profit and - windfall profit tax. And this was an alternative to that. Part of the agreement with the government is that as we accept this voluntary contribution, there will be no windfall tax on mining.

On the other hand, one part of this agreement is that there is a level of prices, a minimum level of prices to pay these contributions, which is going to be fund managed privately, which is important, no? But...

By the mining company.

By the mining company. We are just talking about the minimum price that we are going to fix in order to spend the contribution vehicle, the entire contribution if eventually it goes below that.

And when do you expect the first contribution to be made and the community [series] this contribution from the mining company?

The idea is to pay the first contribution in January on basis of the year '06 results.

Okay. Thank you.

[OPERATOR INSTRUCTIONS] We will take another follow-up question from Rafael Urquia with Citigroup.

I am sorry, just a very quick question. Regarding the contributions from Buenaventura's control operations, I have an idea that this operations were already paying royalties. My question is, why would these mines would have to pay these voluntary contribution?

The voluntary contribution of 3.75% on net taxes - on net income gets a deduction of whatever royalties you pay. Buenaventura is paying royalties and we will deduct. That is the reason why the amount that Buenaventura will be paying as a voluntary contribution is so small.

Okay. Thank you very much.

And at this time, we have no more questions in queue. I would like to turn the conference back to Mr. Benavides for concluding remarks.

Well, thank you very much to all of you for attending this conference call. We certainly appreciate being in contact with all of you and please feel free to call on us if you have any further questions. And certainly, we will try our best to continue improving our operations. Thank you very much and good morning.

And that concludes today's conference. Thank you for participating. You may now disconnect.