Compañía de Minas Buenaventura S.A.A. (BVN) Q2 2026 Earnings Report, Transcript and Summary

Good day, and welcome to the Compania de Minas Buenaventura Second Quarter 26 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, may press star then 1 on a touch-tone phone. Please note this event is being recorded. I would now like to turn the conference over to Sebastian Valencia Carrasco. Please go ahead.

Good morning, everyone. Thank you for joining us today to discuss our second quarter 26 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 Massas Development and Commercial Mr. Renzo Macher, Vice President of Projects; Mr. Juan Carlos Salazar Caceres, Vice President of Geology and Exploration; Jose Malca La Fuente, Vice President of Sustainability Mr. Roque Benavides, Chairman and Mr. Raul Benavides, Director. Before I hand the call over, please let me touch first on a few items. On Buenaventura's website, you will find our press release that was posted yesterday after market close. Please note that today's remarks include forward looking statements that are based on management's current views and assumptions. While management believes that assumptions, expectations and projections are reasonable in view of 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 results release issued on 07/30/2026. Let me now turn the call over to Mr. Leandro Garcia.

Thank you, Sebastian. Good morning to all, and thank you for joining us today to discuss the quarterly results of the company. On Slide 2 is our cautionary statement. Important information that I encourage you to read. Today, we will talk about our second quarter 26 performance. Our main achievements and our priorities for the future. After the presentation, we will be able for a Q&A session, where our team will be happy to answer your questions. Next slide. I would like to begin with a brief overview of our operational performance during the second quarter of 26. Consolidated gold production increased 12% year over year to 30.1 thousand ounces. Primarily driven by the continued ramp up of San Gabriel. Consolidated silver production increased 2% year over year to 3.6 million ounces mainly supported by higher production at Jumpak, while copper production increased 2% year over year to 13.5 thousand tons, reflecting a stable production at El Brocal. San Gabriel produced 2.8 thousand ounces of gold during the quarter and began in the second quarter of 2026. Marking its first contribution to Buenaventura sales volumes. More details on the project's ramp up and key developments are presented in the following slides. In addition, after quarter end, we received approval to increase Yumpak's mining throughput from 1 thousand tons per day to 1.2 thousand tons per day, an important milestone toward unlocking additional production capacity. Our capital allocation remains focused on projects and assets that enhance productivity. Support growth and create long term value for shareholders. CapEx totaled approximately $98 million primarily allocated to San Gabriel, El Brocal and Uchucchacua-Yumpag, supporting productivity, operational reliability and future value creation. Moving on to the next slide, I would like to summarize our second quarter financial performance. Our operational performance, combined with the favorable metal prices translated into another quarter of robust financial results. Total revenues increased 43% year over year to $529 million EBITDA from direct operations reached $277 million increasing 113% compared to the same period last year. Importantly, EBITDA margins expanded from 35% to 52%. Net income reached $261 million representing a 165% increase year over year and reflecting a stronger operational performance across our core assets. Our balance sheet remains a key strength of the company. We closed the quarter with $759 million in cash and $69.002 million in total debt, maintaining a net cash position of approximately $67 million Net debt to EBITDA remained at negative 0.05x, underscoring the financial flexibility of the company. Energetica de Huancavelica S.A.A., our power generation subsidiary, we reduced the outstanding balance of the financial lease 2031. from $63 million to $50 million with the remaining balance to be amortized. Through year-to-date, dividends from Cerro Verde reached $274 million including $118 million received in July. Moving on to the cost applicable to sales strength. Starting with copper cash, performance remained stable year over year mainly at El Brocal. Silver cash increased compared to the same period last year, primarily reflecting higher commercial deductions associated with price based escalators at Uchucchacua and Yumpag. And finally, gold cash was impacted by the commencement of commercial sales of San Gabriel. During the quarter, the operation recorded cost applicable to sales for the first time as it continued progressing through its ramp up phase. As production and sales volumes remain below expected steady state levels, current unit costs are not yet representative of the operation's long term cost profile. Next slide, please. As mentioned earlier, San Gabriel continue progressing through its ramp up phase during the second quarter. While throughput remained constrained by tailings management and filtration challenges, the operation continue advancing across all key areas of development, and we remain focused on achieving a stable and sustainable ramp up. At the mine, we have completed the primary ventilation infrastructure and continue advancing the development of the full mining fleet. Which will support future production growth. At the same time, we expect to begin undercut mining below cemented fill during the third quarter, representing another important operational milestone. Within the processing plant, our priority remains stabilizing throughput and improving operating performance. Current efforts are focused on moisture control, filtration performance and metallurgical optimization. Where recoveries expected to continue improving during the second half of the year. On the tailings side, we expect filtered tailings compaction to begin during the third quarter. While ongoing expansion works are designed to progressively support higher throughput level as the operation advances towards steady state conditions. On the next slide, we highlight our strong free cash flow generation. The second quarter of 2026. Solid operational performance supported by dividends received allow us to close the quarter with a cash position of $759 million The chart also reflects the dividend payment we made in May. Importantly, this balance does not yet reflect the $118 million dividend received from Cerro Verde in July following the quarter end. Before opening the line for questions, I would like to leave you with 4 key messages. First, San Gabriel continued advancing through its ramp up phase during the quarter. The operation began recording commercial sales in the second quarter of 2026 and is now starting to contribute to Buenaventura's results. While we continue working through the challenges inherent to any ramp up process, our focus remains on achieving stable and efficient operations that will become an increasingly important contributor to the company's growth. Second, we continue executing our growth strategy across the portfolio. A key milestone was achieved at Yumpag where we received approval to increase the mining rate from 1 thousand tons per day to 1.2 thousand tons per day. This represents the first step toward unlocking the operations full potential, while we continue advancing the next phase of expansion. Third, exploration remains part of our DNA. As we continue unlocking growth opportunity across our portfolio We remain committed to extending our life of mine and supporting the long term sustainability of our production growth. We believe that growing production and replenishing resources must go hand in hand to ensure long term value creation. Finally, the combination of the strong operating performance, disciplined capital allocation, and favorable commodity prices environment continue to strengthen our cash generation and balance sheet. These financial strength give us the flexibility to invest in our growth portfolio execute our long term strategy and continue delivering value to shareholders through our dividend policy. Thank you for your continued interest and support. We appreciate your time today and look forward to answering your questions. Operator, please go live.

We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw the question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Tanya Jakusconek from Scotiabank. Please go ahead.

Great, Ted. Good morning, everybody. Thank you for taking my questions. I have 4 Questions if I could. I am going to start with San Gabriel first. Maybe someone can just provide me some insights into how the mining and the processing are doing relative to your block model now that you have gone commercial? And also in the underground and in the processing facility, what do you still need to do to optimize any I saw the recoveries need to be optimized, but anything else to get you to that steady state?

Thank you, Tanya, for your question.

We as I told you before, we are very focused on San Gabriel. We have a plan to deliver what we what was our guideline for 2026, pending the ramp up in the middle, mid-2027. Maybe Juan Carlos can give you more color in this topic, please. Please, Juan Carlos.

Sure, Leandro. Tanya, regarding the mine, the underground mine, we are feeling comfortable with the product that we have in the new mining method, the undercut and fill. We are already in the first undercut You know, we need the original mining layer with cemented backfill. So we are doing okay according to the plan. We are ramping up production We are opening new phases, and now we are according to the to the plan. So the underground mine is moving ahead. it is according to our plans. We will have the fourth fleet for underground mining for Buenaventura, by the end of August and 2 additional fleets for future developed underground with a contractor. by November, according to the plan. So the underground mine is moving along. Regarding the processing plant, we have 2 lines of work. 1 is related to the increase of throughput and the second 1 is increase in recovery. Regarding the throughput, we are facing some problems with the press filters. Remember that we are using dry stacking for daily disposition. So we need to filter all the tailings. We are having some problems with the structure basis of the foundation of the filters. Remember, there are high pressure filters. So when they are loaded with full pressure, they start to generate a back movement in the structures and according to the tolerance that we have to have in these structures are beyond that. of that So we need to do further works to reinforce the structure. And put some additional steel and reinforce with new structures, additional structures on top of what we have in the building. We have 3 filters, so we need to do 1 by 1 to reinforce the filters. Once this tasks are completed, we are on track to reach full capacity from that processing plant. Regarding the recoveries, gold recoveries, it is a very complex ore. We are following all the parameters that we do have. We need to fine tune our set point for all of them, and use additional reagents. We have some preg-robbing coal in the in the ore. Generating a lot of trouble. So we need to add additional reagents new reagents that we do not have in Peru. So we are bringing these reagents in August to start testing it. Industrial scale. We already tested them at a lab scale. They are giving good results. They are part of the solution. And probably, will require finding the right dosage of the reagents for reducing the impact of that we already faced in the second quarter. With that, we expect to about 70% gold recovery by the end of 26. The following actions to go beyond 70% recovery, core recovery probably are linked with an additional circuit for flotation. Probably we need to remove all the coal, all the organic matter that we have in the ore. Not only use the reagents that I mentioned at the beginning of my comments, but probably we need to remove that coal in order to avoid further complications in the process. So the flotation circuit is being designed. Probably, we need to get all the permits and all the designs ready by the end of the year and make the implementation of these new flotation circuit for coal and partial sulfides refractory sulfides by the end of 2027. So there are 2 milestones, the first 1 which is 70% gold recovery by the end of 26 and beyond that, 70% closer to the 85% that we have in our budget. Probably by the end of 2027.

Okay. And just so I understand the issue that you are having with the recovery has got to do with organic matter. that is sitting with the gold. it is organic matter and there is a small fraction of the gold that is in the sulfides. it is becoming a little bit harder to extract that gold out of the sulfide. So we believe the best option is to do a complete flotation, not only for the organic matter, coal and carbon, but in addition to that, the flotation of the sulfide as well. Okay. So it is 2 things. Okay. So the sulfide and organic matter. Okay. Thank you for that 1. And then the second question I have is just on the cost overall. Besides the inflationary pressures you are seeing from higher fuel prices and maybe royalties paid? Are you seeing any other inflation in terms of labor or any other consumables or any issues with the supply chain and what you need for your costs?

Daniel, this is Daniel. We do not see or we do not foresee at this point in time any major inflation effects As we were speaking last quarter, the impact of higher diesel prices had an effect of around 5% in our OpEx, probably having diesel at the same levels as the last quarter, the impact could be around 5% to 7%. Also, as you mentioned, the workers' profit sharing is also increasing slightly our costs, but nothing else. We do not have energy issues. And other reagents or consumables are keeping the same price for what I mean, at least. Okay, Daniel. Thank you for that.

that is good to see. And I guess when I have you on, what about expectations for dividends from Cerro Verde for 2026 and longer term? I mean, we are doing above the guidance range you provided. So what would you guide for us for Cerro Verde's dividend?

Well, for the first half of this year, Cerro Verde has already distributed close to €160 million We have already reported another €120 million. This is for Buenaventura stake. We have already reported €120 million of dividends that will be or have been already paid in July. So this adds up to around 274 million. We expect between $50 million to $100 million in addition to this by the third or by the fourth quarter. So in total, we should be receiving between $350 million to $380 million of total dividends for this year. Daniel, should I be at a similar level for next year?

Probably, yes.

Yes. Depending on the price. Could be $50 million or $80 million less. Remember that the dividend that we received in January was a dividend that came from the previous year. Yes. And maybe 300. Yes. Which is higher than what we have been receiving. Oh, absolutely.

Our next question comes from Carlos De Alba with Morgan Stanley. Please go ahead.

Yes. Thank you. Good morning, everyone. Good to be here. Just in terms of all the initiatives that you are pursuing in San Gabriel to address the challenges? What are the CapEx and OpEx implications? How much CapEx are you investing in those initiatives and is cost going up? And if you can maybe just remind us what are the CapEx expectation for this year, maybe next year? And then what is the cost looking like, the OpEx for San Gabriel once you stabilize the operation?

Carlos, the total CapEx we expect to spend this year is around $500 million. We already have expended in the first half around 200 million. From that, all the investment we have to do in San Gabriel and El Brocal and all the our flagships are according to what we expected in the guidelines. And mainly related also in opportunities that we have found taking advantage of the prices, then we have opportunities to do the CapEx to keep the CapEx for next year. We can move forward a little bit. Another type of CapEx that we are identifying is the with how we are going to prepare for the El Nino phenomenon. So we that will be the guideline for this year. In terms of especially the CapEx for San Gabriel, it is around the rest of the year is $60 million around that number. I do not know, Juan Carlos, if you want to give us some more ideas.

Leandro. In the case of San Gabriel, all the comment that I made regarding the increase in recovery for 2026 has not materially in regard of OpEx and CapEx are more on the fine tuning of the existing infrastructure and using additional reagents that replace all the reagent that we have. Been used before. In the case of increasing throughput, as I mentioned we need to reinforce the structures that holds the 3 filters, press filter for tailings, We are working on the engineering for these RACE force Top of my head, I would say something between $5 million to $10 million you know, but probably we need to do the engineering and probably will be in the lower range. But it is something that we need to still work on. Have something that really solve the problem, but at the same time, it is fast to be implemented and with the existing constraint because the filters are already mounted on their on their basis.

So it is basically an impact that has more impact on CapEx but not really impact on OpEx. No. We probably follow our budget for OpEx for the year.

Of course, the impact would be a lower throughput than expected that will impact the cost per ton, but not the overall amount of dollar that we spent all year.

And what will be the cost of adding the additional flotation circuit?

We have not finished the engineering so far. We expect it to be in the order of $15 million probably for next year.

Sorry, 50 or 15?

15. 15. And that does not increase the cost significantly, the OpEx cost? The additional circuit No. Maybe $1 or $2 per ton. Out of $130, so it is not material, maybe 1% increase in cost To capture 10% more on recovery.

Right. Okay. Yeah. So you will be getting closer to 80% recovery. Okay. Okay. Alright. And then on Cerro Verde, great to see the CapEx coming through Just on production, what is expected copper production this year and next in Cerro Verde?

It has not changed. Yep. it is the same guidance. it is a little lower than the prior year, but it has not been any change in the guidelines. If you allow me, Leandro? Yes.

Production of the 6 months of 2026 is about 187 thousand tons of fine copper. 187 thousand. Probably, it is a very steady operation. you can probably expect the same production for the remaining 6 months of 2026. So it is going to be around 370 thousand-380 thousand tons of copper for 2006.

Okay. Thank you. And you will be getting and what will be the will the percentage of the Cerro Verde production that you are getting change in the coming quarters?

No. No, we have a contract of 40 thousand tons of concentrate.

Okay. Alright. Then on Julcani, there was a big shift in the production mix between gold and silver. And what is the outlook for the remainder of the year And I do not know if you have a view on 2027.

Well, after the more production we have, we have changed where we are concentrating in another area of the production. that is the reason why the production of silver lowered a little bit from our guideline. However, the gold increase for the new areas we are working. As you know, we are in a process that in this quarter, we expect to have some news of if we have arrived a final decision to sell Julcani, And we have the plan until 2026. But however, once we end this process, we will see we continue we can give you the guideline for the 2027 year.

Okay. Alright. But for the second half of 26, this mix of gold and silver should remain stable or the mining plan suggests something different?

No. We continue with the same in the same areas. Yes.

Okay.

All right. And then finally, on Uchucchacua and Yumpag, there was a significant increase, almost double and it is mentioned there that was driven by price based escalators. So as silver has come down, how do you see CAS adjusting back down? Just I guess, just if you can share any color given the importance of that operation. And the big increase in cash that we saw in the second quarter.

Well, as I understand, the base escalator, the price that we use as base for the contracts of this part of the year, the first 6 months was around $35 For the new contracts, I think we are fixing that base in $50 I do not know, Aldo maybe can give you more information.

Yes, Leandro. You are right. For the first half of the year, have this floor price of $35 per ounce. And these contracts are going to end in August of this year. And from September to December we are going to start with a new base of $50 per ounce.

Okay. Alright. Thank you.

Our next question comes from Cesar Perez-Novoa with BTG Pactual. Please go ahead.

Yes. Good morning. My first question, relates to Yumpag, you received the approval to increase your throughput rates by 20%. My question is how is this expected to impact silver production going forward? And could you actually quantify this potential increase and discuss whether this scale-up might affect or improve the cost structure of this asset.

Yes. This is Taking into consideration that we have received at the half of the year, we are now ready to begin production at 1.2 thousand tons per day. We expect that a 10% increase of what we were thinking at the beginning of the year.

Okay. Okay. And is this going to have, Leandro, any impact or improvement on the cost structure for this mine?

Yes, sure. Juan Carlos, please.

Yes, you are going to have a positive impact. We dilute our fixed cost by 20%. But in addition to that, by the fourth quarter of this year, we are connected the Yumpag operation with the National Electrical Grid So we replace all the power generated by electricity, cheaper electricity So the outcome by the end of the year is going to be a double effect: the effect of larger throughput and the replacement of energy coming from generator, diesel generators by electricity coming from the national grid. So it is gonna be a comfort option in the level of 15%-17% lower than the operating cost of the first half of the year.

All right. Thank you very much. Can you also assess the current progress on the Trapiche copper greenfield, given how high Copper Prices Are The Cash Flow That You are Generating, The Substantial Dividends You are Getting From Cerro Verde, Is there any scope to accelerate the development timeline?

Thank you, Cesar, for this question. Here with us is Renzo Macher, and he can give you idea of what we are going on in Trapiche. Please Renzo, go ahead.

Yes. Thanks. And thanks for the question. Yes. Actually, due to this increase in copper prices, the opportunity of exploring the primaries, which are currently open underneath the secondary sulfates, it is getting closer to our realities. So we are gonna be spending the next year, year and a half in understanding if it is a business, and meanwhile, we are going to keep reducing the current risk of the project, which is the access road, the power line, and the licenses and trying to get a bit deeper into the acid consumption.

Alright. And this is my last question. Has El Nino had any operational impact to date? or do you have any concerns about future effects If so, which mining areas operations or logistics do you see as most at risk if any of course?

Yes, Cesar. Thank you for your question again. Identified some risk in our risk management meetings. We have seen all our main operations and what will be the effects. We are part of the increase a little increase in CapEx is related and is added to what we thought in the beginning of the year, we are going to spend on that. So we have added additional CapEx around $12 million And maybe Juan Carlos can give you the exact idea on what are the activities we are undertaking.

And what we are preventing.

Sure, Leandro. Since the end of April that we have the early alert of El Nino, a strong El Nino. We starteded treating our safety committees for preventing any potential damage from this impact heavy rains. So we already put a committee in each of the mines. Each of the mines have mapped all the potential risk that we have and we authorized an increase in CapEx of about $12 million to be spent in the rest of the year 2026 in order to be prepared for larger rainfall, increase pumping capacity, power for the pumps, water treatment facilities, reinforcement of certain critical structures like water dams or reservoirs. So we are working on that regard. We have very strong technical committee working on that regard. So far, we have not had any damage like probably you heard the news about the damage for heavy rainfall in Chile. We do not have that in Peru. But we are preparing for probably a strong rainfall in the next rainy season starting in December 2026.

Alright. that is fairly detailed. Thank you very much all of you.

Thank you.

This concludes the audio portion of the Q and A session. I would like to turn it over to Sebastian Valencia Carrasco for webcast questions.

Thank you, operator. The last question comes from [Operator Instructions]. Given the recent price drop in gold, any risk that production in Orcopampa, Tambomayo could be reviewed?

Of course. No. My first answer is no. We permanently are reviewing the value that we add with any ounce we produce, but we are building a plant for Orcopampa and Tambomayo for the following years. We continue in that trend.

Thank you, Leandro. At this time, there are no further questions. I would like to turn the call over to Leandro for final remarks.

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

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Goodbye.