Compania de Minas Buenaventura SAA (BVN) 2014 Q4 法說會逐字稿

Good morning. My name is Katie and I will be your conference operator today. At this time, I would like to welcome everyone to the Buenaventura earnings conference call.

All lines have been placed on mute to prevent any background noise. After the presentation, we will conduct a question-and-answer session. The instructions on how to ask a question will be given at that time.

Thank you for your attention. I would now like to turn the call over to Melanie Carpenter of i-advize Corporate Communications. Please go ahead, ma'am.

Thank you. Good morning, everyone. Welcome to Compania de Minas Buenaventura's fourth-quarter and full-year 2014 earnings conference call on this February 27, 2015. Today's call is for investors and analysts only; therefore questions from the media will not be taken.

Joining us from Lima, Peru, are Mr. Roque Benavides, Chairman and CEO; Mr. Carlos Galvez, Chief Financial Officer (technical difficulty) other members of the Company's senior management team. They will be discussing the results per the press release distributed yesterday. If you did not receive a copy, please contact i-advize in New York at 212-406-3693.

Before we begin, I would like to remind everyone that any forward-looking statements made by Buenaventura's management are subject to various conditions and may differ materially. These conditions are outlined in the Company's earnings release in the disclaimer section. Please refer to that for guidance regarding this matter.

And now it's my pleasure to turn the call over to Mr. Roque Benavides, Chairman and Chief Executive Officer of Buenaventura, for his presentation. Mr. Benavides, please go ahead.

Thank you. Thank you for attending this conference call. I want to add that Mr. Igor Gonzales is also with us, our new Chief Operating Officer, and we are very pleased that he has joined the team. He used to be a Board Member of us, he continues to be a Board Member and now he is in charge of all of our operations.

In the fourth-quarter 2014, our EBITDA from direct operations was $39 million, and if we include our associated companies, this adds to $167 million. Strong gold production from Yanacocha in the fourth-quarter 2014 permitted to achieve the high end of the annual guidance.

Total attributable production in the fourth-quarter 2014 was 245,000 ounces of gold and 5.5 million ounces of silver. Full-year 2014 attributable production was 846,000 gold ounces and 19.7 million ounces of silver.

At the Tambomayo project, an environmental impact study was approved -- our environmental impact study was approved in January 2015 and construction is expected to begin in the second quarter of this year. Gold reserves from direct operations increased 13% due to Tambomayo project.

At the San Gabriel Chucapaca project, the critical surface property acquisition was finalized and the Company is working to obtain permits for advanced exploration with underground development.

Cerro Verde's plant expansion to 360,000 tons per day is in-line with schedules and budget. Additional production from the expanded plant is expected as early as the first day of 2016.

In the fourth-quarter 2014, Buenaventura's gold equity production from direct operations remained flat, 104,000 ounces of gold compared to the fourth-quarter 2013. Gold production including associated companies increased 33% due to higher production from Yanacocha. Silver equity production from direct operations increased 14% due to higher production in Uchucchacua and El Brocal.

In Orcopampa, our gold production at Orcopampa increased 14% in the fourth-quarter 2014 due to higher ore treated. Cost applicable to sales in the fourth quarter decreased 15%, explained by lower reagent cost and improving efficiencies due to better contractor allocation. Our gold production guidance for Orcopampa in 2015 is between 190,000 ounces and 205,000 ounces of gold.

In Uchucchacua, our silver production in the fourth quarter increased 18% compared to the same quarter of 2013, mainly due to higher ore volumes treated and recovery rates. Cost applicable to sales in the fourth quarter decreased 5% compared to the fourth-quarter 2013, mainly explained by lower reagent costs, better contractor terms and infrastructure improvement inside the mine.

Silver production guidance for Uchucchacua in 2015 is in between 14.5 million ounces and 15 million ounces. This will be a new record for Uchucchacua, two in a row because in 2014 we had a record production in all the life of Uchucchacua.

In our smaller silver mine, Mallay, silver production in the fourth quarter was 6% lower than the fourth-quarter 2013 and our silver production guidance for this year is between 1.1 million ounces and 1.25 million ounces.

At Julcani, our silver production in the fourth quarter was in line with the fourth-quarter 2013. This mine is very consistent and very flat in this respect. Our sliver guidance for Julcani is in the order of 3 million ounces for 2015.

In La Zanja, where we have a 53.06% equity participation, our gold production in the fourth quarter increased 4% when compared to the fourth quarter of 2013. Cost applicable to sales in this quarter increased 26% (technical difficulty) --

Excuse me everyone, please remain on the line while we reconnect our speakers. Again, please stay on the line as we reconnect our speakers.

Gentlemen, you may continue.

Okay. Hello?

Yes, sir, you may continue.

Yes. We were talking about Tantahuatay. I think that was the last that we mentioned. Our gold production for the fourth-quarter 2014 increased 15% compared to the figure of 2013.

Cost applicable to sales increased 24% due to higher consumption of reagent and blasting supplies due to higher stripping ratio. Our goal production guidance for Tantahuatay is similar to La Zanja in the order of 140,000 ounces of gold.

In El Brocal, where we control 54% of the equity, during the fourth-quarter 2014 zinc production increased 100% compared to 2013 due to higher volume treated from the Tajo Norte polymetalic. Copper production increased 15% compared to the same quarter of 2013.

Silver production increased 57%. And the cost applicable to sales is 13% compared to -- increased 13% compared to the same quarter of 2013 due to higher commercial deduction in the zinc -- and zinc cost applicable to sales increased 5%.

Zinc production guidance for 2015 is in the order of 80,000 tons of zinc and copper production guidance is in the order of 35,000 tons of copper.

In terms of our exploration in non-operating areas, during the fourth quarter was $17.8 million compared to $9.4 million in the fourth-quarter 2013. During the period, Buenaventura's main exploration efforts were focused on the following projects; La Zanja Underground $5.9 million and Tambomayo $3.2 million.

For the 12 months of 2014, the expense was $50 million, which includes $20 million in the Alejandra Underground exploration in La Zanja and $5 million that -- on behalf of El Brocal in an exploration in the surroundings of (inaudible).

Our share in associated companies during the fourth-quarter 2014 -- Buenaventura's share in associated companies was negative $113.8 million compared to negative $288 million reported in the fourth-quarter 2013, composed essentially because of impairment in Yanacocha.

And in terms of Yanacocha, during the fourth quarter gold production was 322,000 ounces of gold, 75% higher than the same quarter of 2013. For the 12 months of 2014, gold production was 969,900 ounces, 5% lower than 2013, but in the high end of the guidance given at the beginning of the year. 2015 gold production guidance for Yanacocha is between 880,000 ounces and 940,000 ounces.

Despite of the fact that Yanacocha reported $80.6 million of net income under US GAAP, the impact of an impairment loss in accordance to IFRS related to Conga resulted in a loss of $380 million. And in the fourth-quarter 2014, cost applicable to sales was $426 per ounce, a decrease of 50% when compared to $849 per ounce in the same quarter 2013 due to lower stripping ratio in accordance with the mining plan.

Capital expenditures at Yanacocha were $31.6 million in the fourth quarter and $117 million for all of 2014. Yanacocha still has a strong pipeline of growth projects; Quecher Main, it's a prefeasibility, Chaquicocha Sulphides and Yanacocha Verde, a scoping, and Maqui Maqui, an exploration.

At Cerro Verde, during the fourth quarter copper production was 56,000 metric tons, 11,000 metric tons attributable to Buenaventura, a 19% decrease compared to the fourth-quarter 2013. For full-year 2014, copper production was 227,000 metric tons of copper, 44,500 metric tons attributable to Buenaventura.

During the fourth-quarter 2014, Cerro Verde reported net income of $55.9 million, 72% lower compared to $196 million in the same quarter of 2013. This was mainly due to lower sales. For the full-year 2014, net income was $377 million.

Capital expenditures at Cerro Verde including the expansion project were $448 million in the fourth-quarter 2014 and $1.75 billion for full-year 2014.

Cerro Verde's plant expansion has an excess of 50% progress and completion is expected by the fourth-quarter 2015. The total CapEx for the project is $4.6 billion.

At Coimolache, attributable contribution to the net income in the fourth-quarter 2014 was $5 million. For 2014, the contribution was 22.3 million compared to $20.8 million reported in 2013.

The Tambomayo project, environmental impact study was approved in January 2015 and the Company is in the process of acquiring construction permits. Tambomayo has 251,000 gold ounces in reserves and 336,000 gold ounces in resources. The estimated annual production is 110,000 ounces to 120,000 ounces of gold and 3 million ounces of silver.

At San Gabriel Chucapaca project, the Company is currently in the process of obtaining permits for the advanced exploration with underground development of the Canahuire ore bodies and diamond drilling of other prospects.

Yesterday we had our Board Meeting and at the Board of Directors Meeting held on the 26th, the following resolutions were passed; to call for an Annual Shareholders Meeting to be held on March 27, 2015. The following items will be proposed for approval.

Approve the annual report as of December 31, 2014; approve the financial statements as of December 31, 2014; appoint Ernst & Young as external auditors of fiscal-year 2015; and approve the Company's financing operations, including but not limited to placements and issuance of obligations and/or obtainment of loans, as well as delegation of power to the Board for the approval of all the agreements deemed necessary or convenient to determine or approve each and every one of the terms, characteristics and conditions of the Company's financing activities.

With this, we are open to any questions that you may have. Thank you.

Thank you, sir. At this time, we will open the floor for questions. (Operator Instructions)

John Bridges, JP Morgan.

Just wondered with these results, are there any unusual items here, things that impacted these Q4 results over and above the impairment that you reported at Conga, things that impacted these results which are not going to flow through into 2015?

Nothing special, John. We believe that what we have already included whatever we had to provision. There are no additional issues to include. The only thing is that we will continue pushing the exploration underground in Alejandra in order to be able to put in operation perhaps in a year time.

But this is the only thing that is impacting. You know that we expend 100% our exploration efforts.

Well, if I may add, during this quarter we have bought the surface land for the San Gabriel Chucapaca project and that is one shot, no. It may be a smaller amount, but that will not be spent again in the future. The exploration, as Carlos mentioned, at Alejandra in La Zanja will continue and it is nothing that we will stop. So, yes, that's the position.

Where is the land purchase represented in the accounts for San Gabriel?

Well, this is an amount of -- a total amount in the order of $10 million, but this is capitalized because this is land that we purchased.

Okay, good. And then -- but Cerro Verde production is down 19%. What should we take away from that looking forward into 2015?

May I ask Raul Benavides to answer that part please.

Yes. John, there has been a number of issues in Cerro Verde. One is of course they are using the trucks for construction purposes in Cerro Verde and they have been processing stockpiles. These stockpiles have more oxides in the ore. And also you have the rainy season right now and we had some bad rains in Arequipa in the last 15 days. And the water also generates problems.

So that's about it. This is part of the problem that comes with the expansion. But in the future I think that there will be no problem.

The good news is that several haulage trucks are being assembled and we will incorporate into the operations from March onwards. So in addition to that, Cerro Verde is reviewing the mining plan in order to catch up with the traditional standards of production.

Okay. And the copper revenues from El Brocal were relatively low. Was there something unusual that happened there?

Well, you know there was an important production and sale of copper because we focus on that. We sold in total a record production of 162,000 tons of copper concentrate.

The bad news is that this copper concentrate includes an important arsenic content, and this is why the penalization is that high. You know that the treatment charges were very important and for the three months the treatment charges in Brocal were almost $31 million as compared with the quarter of 2013 that were only $16 million. This is to the arsenic content in the copper concentrates.

You overwhelmed the market for high arsenic concentrate this quarter. But that's not going to happen in 2015, is it?

Well, this is -- we are going to review some -- the production and sales of copper due to the fact that we are going to normalize our operations, sharing 11,000 tons capacity to the polymetallic ores and only 7,000 tons to the copper concentrate, besides of the fact that coordinating with our purchasers we stopped delivering copper concentrate during the first two months of the year.

Okay, that's great. Finally, the permits at San Gabriel, how long do you think those will take?

That's a good question. You need Raul again.

What we are planning to do is to start to ramp down underground in April. We have already -- are working on the magazine for explosives to be ready for going underground. That will begin the process. But we will have probably sometime during this year the permit for construction and then we can go and do the work for the main installations for the plant and all the work.

Remember this is an underground mine and it doesn't require as much infrastructure and earth movement as an open pit mine.

I think we -- I can add that there is a worry at the government level that permitting has to be faster, has to be more expedite. And I would say that we can get permitting faster than what we used to get in the past.

So you don't have a permitting problem at all, Roque. Congratulations on the progress with your initiatives, best of luck.

Thank you, John.

Santiago Perez Teuffer, Credit Suisse.

I have two questions if I may -- if I may, sorry. The second one is related to Yanacocha. Could you give more colors on the impairments there? I mean you mentioned that it's related to Conga, but what is reserves -- zero, no cash and we have to expect something similar for 2015 or is this all over?

Well, this impairment -- you know that Buenaventura is the only one that incorporated this in their financial statements due to the fact that we use IFRS while US GAAP is not a requirement.

This is the second impairment we calculate. Remember that last year we had an impairment of $1 billion plus, 50% mainly coming from Conga and the other 50% -- about 50% coming from Yanacocha's operation.

This year Yanacocha reviewed this calculation. There was not necessary to have an additional impairment for Yanacocha's operation. While under IFRS it was necessary to have this $540 million impairment -- additional permit 100% for Conga.

We believe that with this, we have already included almost 100% of our attributable part of these requirements. We do not foresee any in the future, at least from Buenaventura's side.

Perfect, very clear. And then in Cerro Verde, Raul, it was very useful to hear your answer. But can you give us expectations for 2015 in terms of production and also probably in cash cost? And if this rains in Arequipa -- you mentioned these were in this quarter, right, in the last 15 days?

Yes.

Is this going to be a strong impact or how should we think about it?

Well, first of all, what is happening in Cerro Verde is we will have -- at least it's planned up-to-date that the first two mills from this new flotation plant will be running in September. That means that we will have some small production coming in September. But this is part of the commissioning. So what Freeport is projecting is that by mid or the second semester of 2016 we will be in full production, but not before that.

Overall cost in production for 2015?

The costs have been affected by a number of issues that are not going to repeat themselves and we will have a total cost of $1.50. There's a number of good things happening in cost in general in Peru. One is the dollar appreciation; that generally that labor -- that is a big part of our cost -- is going to be less in dollar terms, and also the fuel prices have reduced.

So at least in Cerro Verde, I think you can expect the cost to be in the order of $1.50 in total cost. That's what we had before because we are going to reduce also a little bit the grade with the expansion. As you can imagine, producing 120,000 tons per day is something, but when you go to 360,000 tons the grades are not going to be kept in the order of 0.5, 0.6. It's going to be reduced.

But, yes, it should be producing the 600,000 ounces --

Tons of copper.

-- tons of copper by the end of 2016 for sure.

Perfect, thanks. And just to understand what you mentioned about cash cost. So just from the US dollar appreciation and the changes in fuel prices, do you expect cash cost to go down very significantly towards $1.5 this year?

And then when you are producing on a normalized basis with the 360k tons in the mill, how do you expect it to behave? Because I mean, as you mentioned, grades are going to -- tend to go lower. So you are going to produce with three times the amount of milling capacity, just double the production. So how should we think about this in profitability?

Now what you have to consider is not only the devaluation of our currency or appreciation of dollar, but also the lower diesel price due to the reduction of oil prices in the market that is going to impact positively.

On the other hand, the fact that we had not only these ores coming from the old stockpiles that had been oxidized with a lower recovery impacted. And this is going to be turnaround at the end of this month, February.

We expect that -- it has been announced. From March onwards we are going to get back to the traditional operation area with the regular ores, with the mining plans Cerro Verde is working on and this additional information that we could add some treatment capacity from October onwards during the commissioning. We expect to have the cash cost that was in the last quarter in the order of $1.7 per pound to get back to $1.50. Due to the lower grades in the future, we expect to have $1.60, $1.70 cash cost per pound in Cerro Verde.

Perfect. Very clear and very useful. Thanks a lot, Carlos. Thanks, Raul.

You're welcome.

Karel Luketic, Merrill Lynch.

This is actually Karel speaking. So I have two questions; first on your direct operations if I may. Looking at costs, if we look at -- La Zanja and Tantahuatay have been kind of offsetting the better cost performance from Orcopampa. How should we expect costs from La Zanja and Tantahuatay that if I believe -- if I'm correct, there were driven by higher stripping ratios? How should they evolve along 2015? And in a consolidated way, what should we expect in terms of gold costs from your direct operations? That's my first question please.

Well, first of all, in Tantahuatay I think that we should expect a similar cost in production for this year. La Zanja will be about the same as well. So I don't expect major changes in those costs.

Now, over the other operations, I don't know if Igor wants to comment or Carlos.

Yes, starting in the last quarter of 2014 we've embarked in a cost review for our operations and we were able to achieve some results, and those costs are already included in these numbers that have been made public.

So throughout -- but, however, we continue to do that -- we will continue to try to benefit from the lower activity of all the contractors in mining, and therefore, try to renegotiate better rates as we go.

Well, you can observe that Uchucchacua's cost applicable to save costs -- cost applicable to save have reduced despite of the -- that we have been fine tuning our operations to the new volumes. We are going to have as well the impact -- the positive impact of our currency devaluation and the fuel oil prices.

In the case of Orcopampa, you know that we have completed the ventilation project we had that is permitting to reduce the crews, the number of people in the crews to maintain the operation and the new equipment -- smaller than the one that we had in the past -- is permitting to focus our operation with a lower dilution.

So this has a positive impact. We believe that Orcopampa will continue producing at the same costs we reported, and Uchucchacua has room to move -- to improve this cost.

That's great. Thank you. If I may, a second question here on the San Gabriel project, the old Chucapaca. If you obtain the licenses along this year -- when could you expect the project to effectively start up, let's say, if you get the licenses by mid-year? And what size of project are we talking about in terms of volumes and maybe CapEx, if possible? Thank you.

Okay, we are going to finish the environmental impact study. Probably in April we will submit it to the Ministry. And as I told you, we would like to -- we are expecting to have some permits before the end of this year to begin construction so we can do earth movements around there.

But we have generated some permits before that so that it will permit us to begin with the tunneling, with the ramping on April and some of the installations can be constructed. This means that if we can construct the mine, probably we can do it in one year time.

The best we could do is 2017 to have the mine in production. I think that you can expect by mid-2017. And we don't have the enough information because permits could be delayed and things that we don't control. But if everything goes okay by mid-2017, we could have that mine in production at 3,000 tons per day in sedimentation and floatation so that we can get the maximum out of these ores.

The grades that we are expecting are over 8 grams per ton, and that means that we could be producing in the order of 200,000 ounces per year.

And the CapEx of in the order of $500 million.

We hope that less than that.

And hope less. If you remember the original project with the open pit, was saying something like $2 billion. We have reduced the CapEx substantially and the production will be solid 200,000 ounces plus.

Yes, the one thing that is very good about San Gabriel is that we have lots of information for the studies and everything from the first feasibility study made by Gold Fields. So this makes it easier to go forward than in any other project. And as Roque mentioned, we have the blessing of having the only property we need right now, and that was a main restriction for that project.

That is great, gentlemen. Thank you very much.

Carlos de Alba, Morgan Stanley.

My first question is, if you can give us any comments regarding the $12 million other income that benefited the results this quarter? And clearly if it's a lot of little items you have, that's fine. But if there's a significant element that dropped that number, I would appreciate it. There was a big change quarter on quarter.

And the second question would be, when do you believe you can start up Tambomayo given the progress that has already been made and what sort of ramp up do you expect in that project?

And then finally, if you can comment on the CapEx guidance for this year, that will be great?

In Tambomayo, we have already the environmental impact study approved and we are asking for permission to start constructing. What Igor is planning is that we can make all the construction of steel and everything that we can do in Arequipa, so that we can have things preassembled in Arequipa, and this will reduce the time of construction. Probably we could be producing -- I don't know -- probably next year, by mid next year.

In addition to that, in Tambomayo we have 80%-plus of the detailed engineering completed and we have purchased all the principal equipment and all the main equipment for the processing facilities. So that's a plus to us, and as such, all we have to devote once we get the construction permit is to build the plant.

Yes, in the case of the $12 million you mentioned, Carlos, this is a non-recurring income from [miscellaneous] item. So I could review this in detail, but there is no only one thing that can explain this other income that is net of different [things].

And the CapEx guidance for this year?

The CapEx guidance for this year is in between of $270 million to $300 million, which includes what we have already mentioned. Tambomayo explaining 52% of that, San Gabriel in the order of 18% of this figure and El Brocal, La Zanja and others maybe will sustain CapEx.

And the other thing that we mentioned in Tambomayo is that the grade is going to be about 10 grams of gold and 10 ounces of silver per ton, and we will have a throughput of 1,500 tons per day.

Okay. And how much is maintenance out of the CapEx?

From this CapEx -- sustained CapEx is 24%. The difference is growing.

Okay, great. Thank you. And just to Tambomayo, the milling capacity is how much, 50,000 tons per day?

1,500 tons per day capacity, but initially we are going to work at 1,000 tons per day.

Okay. All right, thank you.

Patrick Chidley, HSBC.

Just a question on the reserves. Just a number of the projects obviously the reserves, including Tambomayo, are quite short mine life and I'm wondering if you could comment on what resources you have behind those reserves to maybe add to reserves and when will we see some of that come through?

I think we have many times explained that underground mining doesn't have as much reserves as an open pit mine. And when we are talking of an Uchucchacua, Orcopampa or even Tambomayo that are underground operations, we essentially feel confident and comfortable with four, five years in advance and obviously committed to continuous exploration. This has been the track record of the Company for over 60 years and that is what we are going to continue doing.

It is very expensive to maintain the tunnels and all the infrastructure to account for reserves in underground mining, and that's the reason for probably not having that much of our reserves in our account.

Yes, if I may add, Patrick, in the case of Tambomayo, before beginning the construction of this project we have already count on three years life of mine in terms of reserves, plus two years in terms of resources to be developed, plus potential for sure in order to continue exploring and developing the mine.

And expanding, because we continue exploring.

And if I may add also, operationally speaking one of the targets of the project this year is of course to find more resources and also do some resource conversion. So it's not that we've taken our eyes out of that particular subject. We are aware of that and we have a campaign for this year already planned for Tambomayo.

Thank you. Okay. And just on a similar subject, San Gregorio obviously doesn't come into the reserves yet. Are you expecting to make a conversion at the end of this year?

Well, we are making substantial progress with the community and we are very pleased that, well, we are getting to terms. There is more confidence between the parties. But we cannot assure that this will happen by the end of the year. We continue working. As I say, we are positive in this respect.

Okay. And actually, how about San Gabriel as well in terms of the reserve conversion potential there?

Well, we are also very confident there. We need to go underground. That will not only permit us to open and to take a sample to do all the testing work that it may remain needed. But also it will enable us to drill from underground, which will be far more efficient than what we are doing right now. And obviously, it will be -- from weather standpoint it will be easier to do it.

In addition to that, Patrick, you have to bear in mind that to report these resources as of reserve, we need to count on the feasibility study that we are working on. Once we complete that, we are going to convert a part of the resources into reserves.

And as Raul mentioned, we are obtaining the permits right now for the explosives magazine and hopefully we can start doing the underground work by May of this year. That's within the schedule. So it's only then we can convert what we have into reserves. But we have to do some development of that ramp first before we start converting reserves.

But that will be by the end of this year you will have the study done I guess and you will have started construction at the best case?

Yes, that's correct. That's correct.

Right.

But in both projects the philosophy is the same. In the case of Tambomayo, we will have five years of reserves and resources and the idea is while that year is going, we will make more reserves and resources in order to cover -- replenish the reserves.

In the case of Chucapaca, San Gabriel, we've been quite more conservative because we had 3,000 tons per day, we have almost 10 years life time. That's the reason that we have the possibility of expanding that plant in both cases to double the capacity.

All right. So that would be to double potentially in the future the capacity to 6,000 tons a day. Is that -- that's right, is it?

Yes.

Okay. And just remind us, what's the resource at San Gabriel, the total resource in gold ounces? Does that change any --?

We are talking at the level of -- at the grade of the scoping studies that was 6.5 grams per tons and total we saw 2.5 million ounces. But with the information that Raul is sharing, that it could be in the order of 8 grams, you have to add, plus the volumes that we have to confirm with the underground development that we expect to complete with the ramp we are going to build.

Sorry, I didn't get. You said 8 -- did you say 8 grams or 8 million ounces?

Eight grams instead of 6.5 grams. That is the number used for the scoping and (inaudible).

Okay, got it. Thanks.

Two-and-a-half million ounce.

Net around 2 1/2 million ounces as Igor is saying.

To begin. It's 25 -- it's two and a --

It's 2 1/2.

As a starter point.

Yes.

Understand.

What happens is that our experience is that normally when you diamond drill, you lose the finds and the ore that you find is 10% to 20% higher grade. Now that's something that we cannot prove, but it's the experience we have.

Yet to prove that, yes. And just quickly on asset sales. I know last year I thought there was some discussion about selling some of the smaller assets. Have you made any progress on that or have you changed the plan?

Yes, we are almost done with Antapite. We have proposals for Shila-Paula and for Poracota. And we have two or three -- three companies almost ready to make a bid for Recuperada. So I would say that you can be confident that by mid-year we could be over with this.

Okay. And Julcani as well or not?

No, sir. That's a kind of a memento for us. We will keep on producing in Julcani and Julcani is making money and it's finding more ore. There's no problem with Julcani.

Good. Okay.

Julcani is producing in excess 3 million ounces of silver and is generating cash and generating profit. It is probably --- last year was the second record year for Julcani. So there is no reason for selling a good asset like that and it has exploration potential.

And important to mention that the average cash cost of Julcani is $12.50 and we had reported during the last quarter a higher cost applicable to sale. The cost is due to the fact that we kept an important inventory, a material that had to be delivered at the smelter abroad to be considered whole. So this is the reason to have this higher or important deviation in the average.

Okay, great. Okay, well, thanks very much, gentlemen.

James Bender, Scotiabank.

I just have a few questions. The first one would be on the income statements. Carlos, I believe you mentioned that the $12 million gain in other, that's not -- it's non-recurring. Is that correct?

Yes, the other, this $12 million reported in the last quarter is a non-recurrent general mutual item. But if you wish, we could have this mutual item in detail in order to show you.

Okay, thank you. And then on the assets held for sale and the loss of discontinued operations, is that related to the four assets that were mentioned in the previous question?

Yes. The question is that we have separated these expenses in order to have a clear -- according to our rules, we have to show in a separate way those operations that -- well, those operating units that have been paralyzed. And this is just to control that we are reducing dramatically the expenses there. Monthly we are spending a little bit $400,000 in total just to maintain and care and tend these units until we sell.

Yes, absolutely I understand that. But that would be Antapite, Shila-Paula and Poracota and --

Right.

Yes, okay. Okay.

And Recuperada.

And Recuperada, yes. Those are my income statement questions. Now, on Tambomayo, previously you had -- I think it was in the Q3 conference call, you had mentioned that the total CapEx was about $200 million and the cash costs were about [$3.50] an ounce on a byproduct basis. Is that still the case or has that changed?

In total, the CapEx for Tambomayo will be in the order of $250 million, including the development of the mine that we have. The second part of your question was -- sorry?

The life of mine cash cost on a byproduct or a co-product, whatever you have?

In terms of gold, we consider that it will be about $550 to $600 per ounce of gold. Giving the byproduct grade of the silver production, that will be in the order 3 million ounces per year.

And just to confirm, the $550 to $600 is that just the gold co-product or is that byproduct including the byproduct -- the --

Including.

Including, okay.

As I mentioned, including the byproduct grade of the silver, 3 million ounces per year.

Okay, perfect. And just to confirm what was previously mentioned, the throughput capacity is expected at 1,500 tons per day, but will start at about 1,000.

Exactly.

And the gold grade is about 10 grams per ton?

Yes. And 10 ounces of silver.

And 10 ounces of -- and what's the expected recovery?

In Tambomayo, it's about 90% in both. There we also are going to make sedimentation and floatation. It's the initial ores, the upper levels. They only need sedimentation. But then we will need floatation.

Okay, perfect. That's it for Tambomayo. And then my last question is on guidance. Usually [you] provide overall guidance for production cost by metal, but I don't think your presentation is up yet. So will you be able to provide some this morning?

Some guidance for costs?

No production.

For production, it is for the year. The guidance for this year is in the order of 800,000 ounces of gold plus. In silver, it will be in the order of 24 million to 25 million ounces. And the drilled production attributable to us will be in the order of 60,000 tons to 70,000 tons of zinc. And in terms of -- sorry, sorry, for copper it will be this level. And for zinc will be about 37,000 tons to 40,000 tons during the year.

Okay. And on the cost side?

Well, we have to calculate the average -- the compound average of that.

Okay. Okay, I can speak with Daniel after. That's it for me. Thank you very much.

Thank you.

Thank you.

Yana Vizer, Credit Suisse.

Well, most of my questions have been answered, but I have one last question regarding cash cost expectations for El Brocal.

Unfortunately, we don't have a final answer to this because we are in the middle of the ramp up. We are fine tuning issues in the questioned facility and we haven't achieved the final solution to that.

Perhaps Igor can add some things to that.

Yes. As Carlos mentioned, we are doing the ramp up process and we are trying to be as methodical as possible. So we found some issues first at the primary crusher -- were resolved. Now the secondary crushing system is being debugged. We had some issues with liners there. We are trying to solve those. Now we are moving into the tertiary crushing and washing section and then down on to the all the classification circuits.

So it's going to take a few weeks before -- or maybe two, three months to debug all this. And only then we will stop worrying about throughput, which is what -- we are expecting to have a combined throughput of 18,000 tons per day.

Thank you. And also we saw a sharp margin contraction. Do you expect this to continue or do you expect 2015 to recover?

Can you repeat that please?

That we saw a sharp margin contraction at El Brocal. Do you expect this trend to continue in 2015 or should we expect a recovery?

Contraction, that's what you said?

Yes, margin contraction.

We expect Brocal to have a far more normal year this year than last year. Last year was the ramp up and it was difficult. There were machineries that essentially were not up to our expectations. There were machineries both in Sweden and in Canada and first-class suppliers, but that were not up to our expectations of performance.

This year is going to be far more normal. And obviously the fact that we have hired [Gonzalo Esielra], this new management, younger people, we expect to have better results in Brocal this year.

Okay, thank you very much.

Swarup Bhattar, HSBC.

A couple of quick questions from me. It looks like you repaid about $180 million in debt obligations in Q4, yet your total debt has not declined. It's flat from Q3. Can you please help me reconcile that?

Yes, well, the question is that Brocal paid some loans and converted into a brand new transaction, which is a leaseback.

Oh, I see. Okay. Okay, I think that's it from me. Other questions have been answered. Thank you.

Thank you.

Thiago Lofiego, Merrill Lynch.

I have a follow-up question here; first, on Yanacocha. We were very positively surprised on the cash cost guidance for this year at -- between 550 and 590. Looking after 2015, what do you expect in terms of evolution after that? Should we see this level as the new normal for the coming, let's say, 3-4 years or could they rise after 2015, just for us to have an idea?

We have been discussing with our partners of Newmont -- in fact we had a meeting last week on Tuesday in Denver. We are evaluating different projects. Essentially, we still are very optimistic that Yanacocha will continue to be a mine -- we think that a mine that has produced in excess of 35 million ounces of gold in this last 20 years-25 years. It is a world-class district.

We are working on the possibility of developing the sulphides at Yanacocha. We will start the underground evaluation by August or July this year. And I can assure you that Yanacocha has still a long life to go and we are confident that we will find additional projects.

In 2015, yes, we will be producing close to 900,000 ounces. And if we are successful in developing all these projects, we will essentially continue producing at these levels in ounces equivalent.

That's great. And on cost, just do you think that we can see stable cost in 2016-2017 or could there be a rise after that?

We don't have a comment on that. We still don't have all the information to have an answer to that.

No problem. Thank you very much anyways. And just a last one if I may. On asset sales that you mentioned, how much do you think we could raise in terms of cash on that or -- I know you mentioned what you are going to also not spend on explorations on that assets too, but what are we talking about in terms of cash benefits?

These are smaller assets. What matters here is to focus -- that the management team of Buenaventura focuses on the operations that do generate profits and EBITDA. So the amounts are essentially for old mines. The case of Shila-Paula is a very old mine. The case of Poracota was an exploration. The case of Recuperada is a very old mine. Antipite has run out of reserves.

So the thing is it is a smaller amount. I would say that altogether will be at the most in the order of $10 million, but nothing more than that.

The most important impact in our P&L once we sell that is to eliminate the provision we have for reclamation of this deposit, that altogether means in the order of -- between $25 million to $30 million, plus the cash that Roque mentioned.

That's great. Thank you all very much for all the questions.

Thank you. At this time, I'm showing no further questions and I would like to turn the call back over to Mr. Benavides for closing remarks.

Well, thank you again for this long conference call. It shows interest on your side and obviously we appreciate that interest.

I just want to tell those of you that are in North America that our team will be visiting some investors and will be in the West Cost. Carlos Galvez will be together with -- hosted by JP Morgan and will be on the West Coast. And myself -- and then Carlos will join -- will be in the East Coast. We will be traveling tomorrow night and will be all week in North America.

And then on Friday, we are hosting breakfast meeting at the New York Palace -- working breakfast in order to expand on all the information that we have passed you this morning.

So whoever has not received an invitation, please --- and you feel like coming, please let us know and you are most welcome.

With this, we thank you for your attention and have a great day. Bye-bye.

Thank you, ladies and gentlemen. This concludes today's conference. You may now disconnect.