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Compañía de Minas Buenaventura S.A.A. (BVN) Q2 2024 Earnings Call Transcript

AInvestSaturday, Jul 27, 2024 12:45 pm ET
2min read

Buenaventura, a leading mining company, recently held its second quarter earnings call for 2024, highlighting significant achievements and future strategies. The call, led by CEO Leandro Garcia, showcased Buenaventura's robust financial performance, with key areas contributing to its success.

Strong Operational Performance

One of the most notable achievements was the increase in EBITDA from direct operations, which reached $85 million, a significant jump from the previous year. This growth was primarily driven by the exceptional results from Yumpag and El Brocal, despite the voluntary suspension of El Brocal's processing plant for 16 days due to community protests. The company's net income also saw a marked improvement, reaching $74 million compared to a net loss of $5 million in the previous year.

Growth and Expansion

Buenaventura's focus on growth and expansion was evident in the updates on the San Gabriel project. The company reported that the project had reached a 57% overall progress, with key milestones expected in the coming months. The start of high voltage power line construction and electrical and implementation construction works are major milestones that will bring the project closer to its goal of producing its first gold bar by the second half of 2025.

Financial Position

Buenaventura's financial health is also noteworthy. The company's cash position reached $172 million, with a total debt of $682 million. This strong financial position, coupled with a net debt EBITDA ratio of 1.4 times, reflects the company's effective debt management strategies and growing EBITDA.

Challenges and Future Outlook

Despite the positive news, the company also acknowledged challenges, such as the decline in ore grades at some mines, including Orcopampa and Tambomayo. This, in turn, has affected the cost structure, with all-in sustaining costs reduced by 91% year-over-year, but copper and gold CAS increasing. The company expects to recover production at Uchucchacua and Yumpag, aiming to reach 11 tons per day by the end of the year.

Investor Relations and Market Outlook

The earnings call also provided insights into investor relations and market outlook. Key shareholders and investors asked questions about dividends, capital inflows and outflows, and future plans. The company's response highlighted its commitment to maintaining cash inflows from Cerro Verde, with expectations of receiving dividends between $120 million and $150 million for the 2024 fiscal year. Additionally, the company plans to sell non-core assets to generate revenue, expecting to receive between $150 million and $180 million from these sales.

Conclusion

Overall, Buenaventura's second quarter earnings call for 2024 presented a mixed bag of challenges and successes. Despite facing operational challenges, the company's strong financial position and strategic expansion plans, particularly the San Gabriel project, bode well for its future. The company's commitment to investor relations, as evidenced by the detailed responses to investor queries, underscores its focus on transparency and stakeholder engagement. As Buenaventura moves forward, its ability to effectively navigate operational challenges while maintaining financial strength will be crucial in determining its long-term growth prospects.

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