Compania de Minas Buenaventura SAA (BVN) 2025 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Compania de Minas Buenaventura Fourth Quarter 2025 Earnings Results Conference Call. (Operator Instructions) And please note that this call is being recorded.

I would now like to introduce you to your host for today's call, Mr. Sebastian Valencia, Head of Investor Relations. Mr. Valencia, you may begin.

Good morning, everyone, and thank you for joining us today to discuss our fourth quarter 2025 results. Today's discussion will be led by Mr. Leandro Garcia, Chief Executive Officer. Also joining our call today and available for your questions are Mr. Daniel Dominguez, Chief Financial Officer; Mr. Juan Carlos Ortiz, Vice President of Operations; Mr. Aldo Massa, Vice President of Business Development and Commercial; Mr. Alejandro Hermoza, Vice President of Sustainability; Mr. Renzo Macher, Vice President of Projects; Mr. Juan Carlos Salazar, Vice President of Geology and Exploration; Mr. Roque Benavides, Chairman; and Mr. Raul Benavides, Director.

Before I hand the call over, let me first touch on a few items. On Buenaventura's website, you will find our press release that was posted yesterday after the market closed. Please note that today's remarks include forward-looking statements that are based on management's current views and assumptions. While management believes that these assumptions, expectations, and projections are reasonable in view of the current available information, you are cautioned not to place undue reliance on these forward-looking statements. I encourage you to read the full disclosure concerning forward-looking statements within the earnings result that was issued on February 26, 2026.

Let me now turn the call to Mr. Leandro Garcia.

Thank you, Sebastian. Good morning, and thank you for joining us today to discuss the quarterly results of the company at the year-end. On slide 2 is our cautionary statement, important information that I encourage you to read. Today, we will talk about our 2025 performance, our main achievements, and our priorities for the future. After the presentation, we will be available for our Q&A session, where our team will be happy to answer your questions.

On the next slide, I will start by providing a summary of our strong results for the year. Copper production in the full year of 2025 reached 52,400 tonnes, down 8% over year. This was mainly because the company processed stockpiles with higher precious metal content following a sharp increase in precious metal. This was in El Brocal. Silver production reached 15.6 million ounces, 1% higher compared to the 15.5 million ounces produced during the same period last year, in line with our annual expectations.

Gold production was 121,000 ounces, down 18% year-on-year, mainly due to lower output at Orcopampa and Tambomayo, consistent with the 2025 planned mining sequence. EBITDA from our direct operations in full year of 2025 was USD112 million (sic – see slide 3, "USD812 million"), which represents an 88% increase compared to the $431.5 million in 2024. Net income for the full year was $830 million compared to $416 million in 2024, which includes $157.3 million (sic – see slide 3, "USD208.9 million") from the sale of Chaupiloma. The year ended with a cash position of $530 million and total debt of $710 million, resulting in a leverage ratio of 0.22 times.

Moving on to San Gabriel. As of now, San Gabriel has reached 99% overall progress. CapEx for the project in the fourth quarter of 2025 was $153 million, primarily allocated to the completion of the processing plant construction. After the quarter ended on January 29, 2026, Buenaventura received $98 million in dividends from its stake in Cerro Verde. Finally, the Board approved a dividend of $0.9904 per share. With this approval, total dividends declared over the past 12 months reached $1.135 per share/ADS.

Moving forward to our 2025 guidance. Regarding gold production, our primary focus is in San Gabriel, which is expected to become our main gold producing asset in the coming years, playing a key role in our long-term growth strategy. We anticipate stable copper and silver production at both El Brocal and Uchucchacua, maintaining consistent output levels. For 2025, we expect total CapEx of between $385 million and $415 million, around $200 million to $220 million with sustaining CapEx, mainly focused on mine development, tailings, and ventilation upgrades at El Brocal, Uchucchacua and Yumpag as well as readiness and ramp-up works at San Gabriel. Growth CapEx for 2026 is expected to be between $185 million and $195 million, mainly focused on the completing of San Gabriel and advancing Trapiche and (inaudible).

Moving on the cost applicable to sales trend. Copper cash increased in the fourth quarter of 2025, mainly due to higher personnel costs driven by improved profitability, increased cement consumption, and foreign exchange impacts at El Brocal. Silver cash increased due to higher commercial deductions at Yumpag, nonpayable value and escalators. Additionally, there were increased ore throughput, partially offsetting lower grades at Uchucchacua & Julcani. Gold cash has increased due to lower throughput, reducing scale efficiency at Orcopampa and Tambomayo.

On the next slide, we will present free cash flow generation. The fourth quarter cash position increased during the quarter, mainly driven by net cash inflows from operating activities.

Moving on to slide 6. I would like to highlight a key milestone achieved last December. We produced our first dore bar at San Gabriel, and we have received the initial operating permit.

The water license is expected in the coming weeks. For 2026, our production guidance is between 48,000 and 55,000 gold ounces. There are still some pending milestones to achieve full potential. This includes the expansion of tailings drying areas and upgrades of the ventilation system. We expect to complete this milestone to enable a stable 2,000 tonnes per day throughput in the third quarter of 2026 and continued ramp-up.

San Gabriel's cumulative progress has reached 99% overall completion by fourth quarter of 2025, primarily driven by finishing the engineering and procurement as well as the construction at 98% of advance. On the next slide, we are showing the processing plants progress, the primary crusher mechanical works at 100%, the SAG and balls mechanical works are at 100% also. And finally, the CIL tanks mechanical works ended with 100% achievement. Moving on, we can see the progress of the main components of the plant.

Moving on to slide 9. We are showing the progress made at the filter tailings plant, which is now complete. To conclude the presentation, I would like to share a few final thoughts. Consistent copper and silver output supported by steady operations at the El Brocal, Uchucchacua and Yumpag ensuring operational reliability. Solid performance from affiliate companies, Coimolache is operating at full capacity, while Cerro Verde distributed $98 million in dividends attributable to Buenaventura stake. San Gabriel has entered in its transition phase, moving from project execution to ramp-up during the first half of 2026, positioning the operation to achieve a stable 2,000 tonnes per day throughput in the third quarter of 2026.

A supportive environment allows us to step up exploration investment to reinforce our reserves and resources base while advancing progressive closures to enhance efficiency. A strong cash flow generation, a solid balance sheet and a disciplined capital allocation enable us to return value to shareholders, reaffirming our commitment to investor returns.

Thank you for your attention, and I will call back to the operator to open the line for questions. Operator, please go ahead.

(Operator Instructions) Carlos de Alba, Morgan Stanley.

So first one is maybe on CapEx. Leandro, significant increase on CapEx versus what expectations are in the sell-side consensus and also -- and probably more intriguing versus what you guys told us just a few months ago in your Investor Day. So maybe can you please provide some detail as to what happened in those last months that led the company to significantly revise all the CapEx? I have a couple of other questions.

Thank you, Carlos, for your question. Mainly primarily in San Gabriel, the pending works are related to earthworks and continue to the -- for the ramp-up of the project. Maybe Renzo can explain the pending issues to be resolved and have the production steady.

Yes, sure. Yes, effectively, we are going to be -- we have some remaining works on earthworks, especially after the rainy season, where kind of all the water systems and the roads are starting to be tested with rains. So there are some minor semi failures that we need to cover and fix and some channels to redirect water that are going to need additional care. And we need to continue with the grouting for the water dam for the last part of the grouting. So that's -- that plus closing some contracts for some additional quantities and material in the plant that is already finished.

And all these failures just eventuated or the company discovered them as the ramp-up started?

Well, when we finish the earthworks, it's still untested. So this is -- we are currently in the middle of the rainy season. So you still -- you keep finding things that can be improved or things that need some extra work to be finished. If there are certain roads that are not working as expected, and we need to do alternative routes and some areas can be accessed with that, but anything major.

Okay. All right. And then on San Gabriel, thank you for the color on the ramp-up. Just what is behind the lower guidance for production this year? Similar, I guess, to CapEx, a little bit of a surprise or a surprise given that just a few months ago, you guided to a higher number.

Yes, Carlos, as we anticipate, we were -- we continue working in the ramp-up and putting all the things away in order to reach by phases, the production of the design plant. So we are going to reach the 3,000 tonnes per day next year. We are making all the efforts to reach as soon as possible, but we foresee a production of 2,000 tonnes per day all this year. And actually, the ventilation, we have to improve the ventilation in order to work on the high-grade areas. We are -- we have a little flexibility of the higher-grade areas. So we are planning to work in only three galleries. Well, maybe Juan Carlos can give the exact explanation of the component of our production.

Yes, Leandro, thank you. Well, number one, as you mentioned, Leandro, is all the components that are still pending for construction and permitting, we will finalize the construction and get the permit granted, the final operational permits by the second quarter this year. At that time, we will have all the area for drying the tailings and for compaction of the tailings inside the reservoir all set up. We have partial permits already set up for commissioning, and we have to have this definitive permit by the second quarter of this year. In addition to that, the mine, it's rescheduling the production plan because after the accident that we have at late December last year, we need to redesign the ventilation sequence.

We need to triple the amount of air pressure that we need to push into the galleries in order to dilute all the gases that we have underground. In order to that, we are bringing more ventilators, more fans, more electrical devices in order to power these equipment. And the consequence of that also in order to have a higher control of the ventilation and the risk linked to gases underground is that we are losing part of the flexibility that we expected to have in 2026. The flexibility in order to mine high-grade areas in six different levels.

Now we're going to be restricted to mine only in three levels. So by throughput, it will be the same, by the gold grade, it will be lower. We are not mining high-grade areas. We are going to be restricted to three levels in which we need to mine the high grade and the average grade to complete the throughput that we compromise with the processing plant. The main reason, therefore, is the lower grade that we are mining in this initial year 2026.

And then maybe one more with a very significant increase in gold and silver prices, I mean others as well, but is the company foreseeing any changes in the mining plan that was presented late last year and maybe the guidance will change. Can you offer some color there?

No. Well, we have reviewed the mining plans of all our operations. And well, the only change we have foresee realized is this San Gabriel, right? In copper, we still with the same objective and silver also.

Tanya Jakusconek, Scotiabank.

Just if I could finish off on San Gabriel. I just want to make sure I understand just of the growth capital of $185 million to $195 million, how much of that is San Gabriel? And what is going to the earthworks and what's going to ventilation?

Yes. Thank you, Tanya. Thank you for your question. Maybe Renzo, you can -- you have the figures there.

Yes. Thanks for the question, Tanya. Yes, from that, San Gabriel is going to be like $160 million. That includes the closing of all the contracts that we have. That's probably half of that. And the other half is additional work in the earthworks. I think the ventilation is more in the sustaining CapEx.

Okay. So you've put it there. Okay. Understood. And maybe if I could just get Daniel to just give me some more guidance. I found the exploration and G&A was lower than I expected in Q4. So can you give me some guidance on G&A for 2026 exploration and dividends from Yanacocha, including the dividend payout, whether you're reviewing that with your Board meeting in March?

Thank you for the question, Tanya. The G&A that we expect for the entire 2026 will be around $60 million to $70 million, which is similar to what we reported in year 2025. This increase compared to previous years is because the workers' participations in profits, number one. And number two, due to the stronger Peruvian currency. Then for explorations, we have the explorations in the mining sites, in the operating sites, which will be around $60 million to $70 million.

We have increased our budget in explorations because we are focusing on more labors in San Gabriel, in El Brocal and Uchucchacua and Yumpag. And also in the nonoperating sides, we'll be disbursing some cash for the other projects that we have, greenfield projects, and this will be around $20 million to $30 million. Our total budget for explorations is between $90 million and $100 million compared to the $70 million that we have been disbursing in the past.

And finally, for dividends, what we expect to receive from Cerro Verde this year is around $200 million, a little bit higher than what we received in year 2025. And what we decided at the Board meeting yesterday was that we were going to pay for this time as the prices are going well and our CapEx for San Gabriel has basically been completed, we will pay 40% of the net income of the previous year from 2025. Remember that our dividend policy is not less than 20% of the net income of the year. We have increased that to 40%, and we will continue evaluating in the future depending on the prices and also with our CapEx program.

Okay. And then just maybe my last question comes on permits and just on Coimolache Sulfides. Are we still looking for that study to come out in Q1 on the Coimolache Sulfides? No, I think it was H1, the conceptual study on the project.

And then on the permitting side, just on San Gabriel, I know we're waiting for this water permit. What's taking so long? And then asset sales, if I could, where is that going on some of your asset sales? And are we hoping to get those done this year?

Thank you, Tanya. For the first question, the Coimolache, we are just ending the study. We have to discuss internally with (inaudible) and ESPRO, which are the following steps we need. We should inform to the market sure in the first half of this year, what are the following positive news for the project. So we continue working on that, but we have to well put it in the Board of Coimolache and get the approval to continue.

In terms of what's the following, the San Gabriel. Yes, the authority has already visited us. We are just waiting for the permit to be signed. So we expect in the following couple of weeks, we hope to receive -- to be granted of this permit. And the last question about was?

Asset sales, yes.

The asset sale, yes, yes, sorry. We continue evaluating this asset. We are in the last part of taking a decision. And as soon as we arrive to a conclusion, we will inform to the market. Maybe Aldo?

Yes. Tanya, yes, we will make a huge analysis about the asset sales. We haven't taken a decision yet if we are going to sell or not. But you have to take into consideration that this increase in precious metals prices, really, you have to think a lot if you want to sell or not an asset right now. But we are still analyzing, and we will take a decision very soon.

Cesar Perez-Novoa, BTG Pactual.

My question relates to Yumpag and Uchucchacua. Could you comment on why cost applicable to sales rose 16% in the quarter. I believe you attribute this to larger throughput of low-grade mineral, but also there is some commercial deductions. And you also mentioned increased nonpayable value. Can you please explain this what it is?

And my second and final question would be regarding guidance. Thank you for G&A and exploration data, but it would be really useful if you could complement this, if possible, with revenues and EBITDA for 2026.

Counter your questions.

Maybe, I will explain a little bit about the deductions in Yumpag.

The escalation, yes, of course. Go ahead.

Cesar, thank you very much for your question. We have two main reasons here. The first one is when you sell silver concentrates with less than 2,500 grams, usually, the payable for that concentrate is between 60% and 70%. When you sell silver concentrate with higher than 2,500 grams, the payable is between 90% and 95%. In the last quarter, we produced more silver concentrate with lower grade. That's why the deduction is a lot more.

And the other reason is the escalators. We have escalators clauses in our contracts. And due to the sharp increase in the price of silver, right now, these escalators are applying to the contracts. What does it mean that if the upper range of the escalator is $50 per ounces and the price of silver is $100, apply a percentage of the price. Do you understand?

Yes, yes, I do. I do. All right. Okay. So those would be the two main reasons.

These are the main reasons why the cost is higher.

That results answer your question, Cesar?

Yes. And the -- if possibly, you could provide some guidance for EBITDA or revenues.

Daniel, please.

Cesar, thanks for your question. If we consider prices at levels of $4,500 for gold, $70 for silver and $12,000 for copper, we should be in the range of revenues at $1.8 billion to $2 billion. This includes close to $100 million of sales from the concentrate that we buy from Cerro Verde from Freeport. The EBITDA that we expect for the total year will be around $800 million and $1 billion.

Fernando Gil, Intesa Sanpaolo.

Just a quick question regarding the Investor Day targets. I remember you announced that three mines are under permanent strategic review, Orcopampa, Tambomayo and Julcani. Could you tell us what is the current status of these mines? And are you starting to do some actions separately or together? And has there been any process -- formal process for any kind of sale? Yes, that would be it.

Thank you, Fernando, for your question. Well, we already began the process and analyzing the feasibility of selling this units, these mines. However, as Aldo explained minutes before, with the increasing price in metal in the prices of gold and silver, we are reanalyzing the possibility. We have been continue advancing on this process. We are close to making a final decision. And if there are, will be sold apart each unit separate or as a whole, we were open to all the possibilities. But by now, the higher possibility, higher alternative -- the best alternative is if we sell it to sell it separately.

(Operator Instructions) Carlos de Alba, Morgan Stanley.

Just on dividends, the $0.99 per share approved by the Board, when do you expect to pay that? And also the $200 million in expected dividend from Cerro Verde, when do you expect you would get that money?

Yes, this proposal of dividends have to be approved by -- in the shareholder meeting. But Daniel, please go ahead.

Yes, Carlos. The dividend payment should be for April, the second quarter of this year. And regarding Cerro Verde's dividends, we have already received in January $100 million from Cerro Verde. And we expect $50 million by July and another $50 million by the fourth quarter of this year.

So that's $150 million, but I thought you said $200 million.

Yes, $100 million in January, $50 million in July and in the fourth quarter, another $50 million.

Ladies and gentlemen, with that, we will be concluding today's audio question-and-answer session. I would like to turn the floor back over to Sebastian Valencia, Head of Investor Relations, for any webcast questions.

Thanks, operator. At this time, there are no further questions. I would like to turn the call over to Leandro Garcia.

Thank you, Sebastian. Well, before we conclude today's conference call, I would like to thank you for the time and effort dedicated in joining us today. Your participation and input are greatly appreciated. Thank you again, and have a wonderful day.

Ladies and gentlemen, that concludes Buenaventura's Fourth Quarter 2025 Earnings Results Conference Call. We would like to thank you again for your participation. You may now disconnect.