BVN

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Buenaventura Announces

Third Quarter and Nine-month 2022 Results

Lima, Peru, October 27, 2022 – Compañia de Minas Buenaventura S.A.A. (“Buenaventura” or “the Company”) (NYSE: BVN; Lima Stock Exchange: BUE.LM), Peru’s largest publicly-traded precious metals mining company, today announced results for the third quarter (3Q22) and nine-month period ended September 30, 2022.  All figures have been prepared in accordance with IFRS (International Financial Reporting Standards) on a non-GAAP basis and are stated in U.S. dollars (US$).

Third Quarter 2022 Highlights:

●	3Q22 EBITDA from direct operations was US$ 22.2 million, compared to US$ 39.5 million reported in 3Q21.

●	3Q22 Operating Cash Flow reached US$ 16.1 million, compared to US$ -464.3 million in 3Q21. The 3Q21 Operating Cash Flow figures include a US$ 544.2 million payment to SUNAT, the Peruvian tax authority.

●	3Q22 net loss was US$ 19.8 million, compared to a US$ 91.9 million net loss for the same period in 2021.

●	3Q22 exploration at operating units increased to US$ 20.7 million, compared to US$ 17.1 million in 3Q21. This increase was aligned with the Company’s revised strategy to increase its focus on exploration in order to extend LOM.

●	Buenaventura’s cash position reached US$ 288.0 million as of September 30, 2022. Net Debt decreased to US$ 448.1 million with an average maturity of 3.6 years.

●	3Q22 capital expenditures were US$ 37.2 million, compared to US$ 23.9 million for the same period in 2021. 3Q22 CAPEX includes US$ 5.2 million related to the San Gabriel Project and US$ 7.3 million related to the Yumpag Project.

●	Construction related activities at San Gabriel are gradually and progressively resuming. Buenaventura has therefore updated its CAPEX guidance for San Gabriel and now expects this to reach approximately US$ 65.0 million by year end 2022.

Financial Highlights (in millions of US$, except EPS figures):

(*) As of September 30, 2022, Buenaventura had a weighted average number of shares outstanding of 253,986,867.

3Q22 net sales were US$ 195.4 million, as compared to US$ 216.9 million reported in 3Q21; a year on year decrease resulting from lower prices and lower volume sold of lead, zinc and silver.

(1)	Buenaventura Consolidated figure includes 100% of Buenaventura’s operating units, 100% of La Zanja and 100% of El Brocal.

(2)	The realized price takes into account the adjustments of quotational periods.

(3)	Considers 100% of Buenaventura’s operating units, 100% of La Zanja, 100% of El Brocal and 40.095% of Coimolache.

Buenaventura’s 3Q22 equity gold production was 55,837 ounces, compared to 54,595 ounces produced in 3Q21. Silver production decreased by 50% year on year, lead production decreased by 33% year on year and zinc production decreased by 36% year on year, primarily due to the suspension of Uchucchacua’s operations as was previously announced, as well as a change in the mine plan sequence at El Brocal. The Company’s 3Q22 equity copper production was 28,909 MT, compared to 25,665 MT produced in 3Q21.

(1)	Buenaventura’s Direct Operations includes 100% of Buenaventura’s operating units, 100% of La Zanja and 61.43% of El Brocal.

(2)	Based on 100% of Buenaventura´s operating units, 100% of La Zanja, 61.43% of El Brocal and 40.095% of Coimolache.

(3)	Based on 100% of Buenaventura´s operating units, 61.43% of El Brocal and 19.58% of Cerro Verde.

(4)	Based on 100% of Buenaventura’s operating units, 100% of La Zanja and 100% of El Brocal

3Q22 gold production at Tambomayo decreased 23% year on year, primarily due to production from lower gold grade areas during the third quarter 2022 partially offset by higher lead and zinc grades, which was aligned with the planned mining sequence. Cost Applicable to Sales (CAS) increased to 982 US$/Oz in 3Q22, from 973 US$/Oz in 3Q21. This was primarily due to lower gold grade of ore treated in 3Q22.

Increased 3Q22 gold production at Orcopampa was primarily due to stable production from the asset’s Pucara vein. Cost Applicable to Sales (CAS) decreased to 803 US$/Oz in 3Q22, compared to 1,147 US$/Oz in 3Q21, primarily due to higher gold grade and lower cash cost.

La Zanja (100.00% owned by Buenaventura)

3Q21 gold production increased by 47% year on year due to the conclusion of Pampa Verde pit (Phase 4) pre-stripping which enables full access to the ore body. 3Q22 Cost Applicable to Sales (CAS) was 1,892 US$/Oz; a 7% increase compared to 1,763 US$/Oz in 3Q21 mainly due to lower than expected Au extraction from the leach pad.

La Zanja’s mine plan has been updated to reflect an OpEx increase associated with raw materials cost inflation during the 3Q22. Mining operations will therefore only be extended through October 2022 when Phase 4 mining will be completed. Operations will be limited to pad leaching during November 2022 while Buenaventura continues exploration related to the underground Cu/Au-sulfide project.

Coimolache (40.10% owned by Buenaventura)

3Q22 gold production at Coimolache decreased by 26% year on year, primarily due to lower grades mined as well as decreased tonnage used for leaching due to permit-related leach pad constraints. Cost Applicable to Sales (CAS) increased to 1,710 US$/Oz in 3Q22, from 973 US$/Oz in 3Q21. This was due to a one-time land purchase transaction in the amount of 234 US$/Oz included within 3Q22 CAS of a small tract of land on the site access route enabling more cost effective and efficient site access.

Exploration and mine development continues as planned at the Uchucchacua mine. The 2H23 target to resume production remains unchanged.

 

Yumpag project construction and permitting continue according to schedule. The 1H24 target to begin production remains unchanged.

 

Julcani (100% owned by Buenaventura)

3Q22 silver production increased 5% year on year primarily due to a higher silver grade. 3Q22 Cost Applicable to Sales (CAS) was 13.80 US$/Oz; compared to 16.79 US$/Oz in 3Q21; an 18% year on year decrease due to a combination of higher grade and lower cash cost (US$/dmt).

El Brocal 3Q22 copper production increased by 32% year on year due to increased throughput and Cu grades from the Marcapunta underground mine. Zinc and silver production decreased by 36% and 58%, respectively, year on year as part as the planned transition from polymetallic to copper ore as well as due to the need to revise El Brocal’s mine plan as a result of the landslide which occurred within the mine’s open pit on March 19, 2022.

3Q22 Copper Cost Applicable to Sales (CAS) decreased by 2% year on year, as higher Cu grades were adversely impacted by the high stripping ratio at the open pit which contributes to El Brocal’s consolidated Cu production in the quarter. 3Q22 zinc CAS increased by 49% year on year due to a higher stripping ratio as part of the revised open pit mine plan which implied mining in a higher stripping ratio area.

3Q22 General and Administrative expenses were US$ 15.4 million; a 2% decrease as compared to US$ 15.6 million in 3Q21.

3Q22 exploration costs in Non-Operating Areas were US$ 4.2 million, compared with US$ 3.5 million in 3Q21. Increased exploration costs during the quarter are in line with Buenaventura’s strategy to focus on extending LOM.

Buenaventura’s share in associated companies was US$ 20.4 million in 3Q22, compared with US$ 58.2 million in 3Q21, comprised of:

Coimolache reported a 3Q22 net loss of US$ 1.0 million, compared to net loss of US$ 0.4 million in 3Q21.

***

Company Description

Compañía de Minas Buenaventura S.A.A. is Peru’s largest, publicly traded, precious metals company and a major holder of mining rights in Peru. The Company is engaged in the mining, processing, development and exploration of gold and silver and other metals via wholly owned mines as well as through its participation in joint exploration projects.

 

Buenaventura currently operates several mines in Peru: Tambomayo*, Orcopampa*, Uchucchacua*, Julcani*, La Zanja*, El Brocal and Coimolache.

The Company owns 19.58% of Sociedad Minera Cerro Verde, an important Peruvian copper producer.

For a printed version of the Company’s 2021 Form 20-F, please contact the investor relations contacts on page 1 of this report or download the PDF format file from the Company’s web site at www.buenaventura.com.

(*) Operations wholly owned by Buenaventura

Note on Forward-Looking Statements This press release and related conference call contain, in addition to historical information, forward-looking statements including statements related to the Company’s ability to manage its business and liquidity during and after the COVID-19 pandemic, the impact of the COVID-19 pandemic on the Company’s results of operations, including net revenues, earnings and cash flows, the Company’s ability to reduce costs and capital spending in response to the COVID-19 pandemic if needed, the Company’s balance sheet, liquidity and inventory position throughout and following the COVID-19 pandemic, the Company’s prospects for financial performance, growth and achievement of its long-term growth algorithm following the COVID-19 pandemic, future dividends and share repurchases. This press release may also contain forward-looking information (as defined in the U.S. Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties, including those concerning the Company’s, Cerro Verde’s costs and expenses, results of exploration, the continued improving efficiency of operations, prevailing market prices of gold, silver, copper and other metals mined, the success of joint ventures, estimates of future explorations, development and production, subsidiaries’ plans for capital expenditures, estimates of reserves and Peruvian political, economic, social and legal developments.  These forward-looking statements reflect the Company’s view with respect to the Company’s, Cerro Verde’s future financial performance.  Actual results could differ materially from those projected in the forward-looking statements as a result of a variety of factors discussed elsewhere in this Press Release.

**Tables to follow**

APPENDIX 1

 (*) Consolidated

(**) Equity Accounting

APPENDIX 3: Adjusted EBITDA Reconciliation (in thousand US$)

*Cerro Verde’s EBITDA accounts for D&A related to the capitalization of the stripping.

Note:

EBITDA (Buenaventura Direct Operations) consists of earnings before net interest, taxes, depreciation and amortization, share in associated companies, net, loss on currency exchange difference, other, net, provision for workers’ profit sharing and provision for long-term officers’ compensation.

EBITDA (including associated companies) consists of EBITDA (Buenaventura Direct Operations), plus (1) Buenaventura’s equity share of EBITDA (Cerro Verde), plus (2) Buenaventura’s equity share of EBITDA (Coimolache). All EBITDA mentioned were similarly calculated using financial information provided to Buenaventura by the associated companies.

Buenaventura presents EBITDA (Buenaventura Direct Operations) and EBITDA (including affiliates) to provide further information with respect to its operating performance and the operating performance of its equity investees, the affiliates. EBITDA (Buenaventura Direct Operations) and EBITDA (including affiliates) are not a measure of financial performance under IFRS and may not be comparable to similarly titled measures of other companies. You should not consider EBITDA (Buenaventura Direct Operations) and EBITDA (including affiliates) as alternatives to operating income or net income determined in accordance with IFRS, as an indicator of Buenaventura’s, affiliates operating performance, or as an alternative to cash flows from operating activities.

APPENDIX 4: COST APPLICABLE TO SALES RECONCILIATION

Reconciliation of Costs Applicable to Sales and Cost Applicable to Sales per Unit Sold

 

Cost applicable to sales consists of cost of sales, excluding depreciation and amortization, plus selling expenses. Cost applicable to sales per unit sold for each mine consists of cost applicable to sales for a particular metal produced at a given mine divided by the volume of such metal produced at such mine in the specified period. We note that cost applicable to sales is not directly comparable to the cash operating cost figures disclosed in previously furnished earnings releases.

 

Cost applicable to sales and Cost applicable to sales per unit of mineral sold are not measures of financial performance under IFRS and may not be comparable to similarly titled measures of other companies. We consider Cost applicable to sales and Cost applicable to sales per unit of mineral sold to be key measures in managing and evaluating our operating performance. These measures are widely reported in the precious metals industry as a benchmark for performance, but do not have standardized meanings. You should not consider Cost applicable to sales or Cost applicable to sales per unit of mineral sold as alternatives to cost of sales determined in accordance with IFRS, as indicators of our operating performance.  Cost applicable to sales and Cost applicable to sales per unit of mineral sold are calculated without adjusting for by-product revenue amounts.

 

Operations’ Cost applicable to sales does not include operating cost for those months during which Buenaventura’s operations were suspended due to COVID-19, as these have been classified as “Unabsorbed costs due to production stoppage” within the financial statements.

 

The tables below set forth (i) a reconciliation of consolidated Cost of sales, excluding depreciation and amortization to consolidated Cost applicable to sales, (ii) reconciliations of the components of Cost applicable to sales (by mine and mineral) to the corresponding consolidated line items set forth on our consolidated statements of profit or loss for the three and twelve months ended December 31, 2020 and 2021 and (iii) reconciliations of Cost of sales, excluding depreciation and amortization to Cost applicable to sales for each of our mining units.  The amounts set forth in Cost applicable to sales and Cost applicable to sales per unit sold for each mine and mineral indicated in the tables below can be reconciled to the amounts set forth on our consolidated statements of profit or loss for the three and twelve months ended December 31, 2021 and 2022 by reference to the reconciliations of Cost of sales, excluding depreciation and amortization (by mine and mineral), Selling Expenses (by mine and metal) expenses and Exploration in units in operations (by mine and mineral) to consolidated Cost of sales, excluding depreciation and amortization, consolidated Selling Expenses and consolidated Exploration in units in operations expenses, respectively, set forth below.

 

Set forth below is a reconciliation of consolidated Cost of sales, excluding depreciation and amortization, to consolidated Cost applicable to sales:

		For the 3 months ended September 30								For the 9 months ended September 30
		2022				2021				2022				2021
		(in thousands of US$)
Consolidated Cost of sales excluding depreciation and amortization			118,419				138,702				337,503				392,990
Add:
Consolidated Exploration in units in operation			20,708				17,058				53,629				40,901
Consolidated Commercial deductions			42,039				47,865				137,887				146,626
Consolidated Selling expenses			5,854				4,935				15,490				14,690
Consolidated Cost applicable to sales			187,020				208,561				544,509				595,208

Set forth below is a reconciliation of Cost of sales, excluding depreciation and amortization (by mine and mineral) to consolidated Cost of sales: