Compania de Minas Buenaventura S.A. 2026 Q2 Earnings Call

Please go ahead. Good morning, everyone, and thank you for joining us today to discuss our second quarter 2026 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 Masa, Vice President of Business Development and Commercial, Mr. Renzo Macher, Vice President of Projects, Mr. Juan Carlos Salazar, Vice President of Geology and Explorations, Mr. José Malca, Vice President of Sustainability, Mr. Roque Benavides, Chairman, and Mr. Raúl 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 current views and assumptions.

While management believes that assumptions, expectations, and projections are reasonable in view of current available information, we are cautioned not to place under reliance on these forward-looking statements. I encourage you to read the full disclosure concerning forward-looking statements within the earnings results press release issued on July 30, 2026. Let me now turn the call 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 two is our cautionary statement, important information that I encourage you to read. Today, we will talk about our second quarter 2026 performance, our main achievements, and our priorities for the future. After the presentation, we will be able for 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 2026. Consolidated gold production increased 12% year-over-year to 30,500 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 Yumpag, while copper production increased 2% year-over-year to 13,500 tons, reflecting a stable production at El Brocal. San Gabriel produced 2,800 ounces of gold during the quarter and began commercialization 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 Yumpag's mining throughput from 1,000 tons per day to 1,200 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, Uchucchacua, Yumpag, supporting productivity, operational reliability, and future value creation. Moving on 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 expand from 35%-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 $692 million in total debt, maintaining a net cash position of approximately $67 million.

Net debt to EBITDA remained at negative 0.05 times, underscoring the financial flexibility of the company. At Huanza, our power generation subsidiary, we reduced the outstanding balance of the financial lease from $63 million-$50 million, with the remaining balance to be amortized through 2031. Year-to-date, dividends from Cerro Verde reached $274 million, including $118 million received in July. Moving on the cost applicable to sales strength, starting with copper CAS, performance remained stable year-over-year, mainly at El Brocal. Silver CAS increased compared to the same period last year, primarily reflecting higher commercial deductions associated with price-based escalators at Uchucchacua and Yumpag. Finally, gold CAS 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 continued progressing through its ramp-up phase during the second quarter. While throughput remained constrained by tailings management and filtration challenges, the operation continued 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, with recoveries expected to continue improving during the second half of the year. On the tailings site, we expect filtered tailings compaction to begin during the third quarter, while ongoing expansion works are designed to progressively support higher throughputs level as the operation advances toward steady state conditions. On the next slide, we highlight our strong free cash flow generation, the second quarter of 2026. Solid operation performance supported by dividends received allowed 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 four 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 Yump, where we received approval to increase the mining rate from 1,000 tons per day to 1,200 tons per day. This represents the first step toward unlocking the operation's full potential, while we continue advancing the next phase of expansion. Third, explorations remains part of our DNA.

As we continue unlocking growth opportunity across our portfolio, we remain committed to extend 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 continues to strengthen our cash generation and balance sheet. This 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.