Buenaventura Announces Fourth Quarter and Full Year 2023 Results

Rhea-AI Summary

Compañia de Minas Buenaventura S.A.A. announced its fourth quarter and full-year 2023 results, showcasing a significant increase in EBITDA from direct operations compared to the previous year. Despite a net loss in the fourth quarter, Buenaventura's cash position improved, and net debt decreased. The company executed the sale of Contacto and started production at Yumpag. However, an adverse ruling by the Peruvian Supreme Court led to a provision impacting net income. Buenaventura received dividends from its stake in Cerro Verde and proposed a dividend payment per share/ADS. Financial highlights include increases in total revenues and EBITDA from direct operations, although net income saw a decline.

Positive

• Significant increase in EBITDA from direct operations in 4Q23 compared to 4Q22.
• Improvement in cash position and decrease in net debt for Buenaventura.
• Execution of Contacto sale and commencement of production at Yumpag.
• Received dividends from Cerro Verde and proposed dividend payment per share/ADS.
• Increases in total revenues and EBITDA from direct operations in FY23.
• Net income decline in 4Q23 due to adverse court ruling impacting provision.

Negative

• Net loss in 4Q23 compared to net income in 4Q22.
• Provision made in 4Q23 due to adverse court ruling affecting net income.
• Decrease in net income for FY23 compared to FY22.
• Negative impact on net income from provision despite no cash outflow.

Insights

Financial Analyst

The reported increase in EBITDA from direct operations by 51% in 4Q23 and 38% in FY23 compared to the previous year indicates operational efficiency and profitability growth for Compañia de Minas Buenaventura. The significant reduction in net income, particularly the 118% decline in 4Q23 and 97% for FY23, is a critical concern, reflecting the impact of the adverse tax ruling which required a large provision despite not causing immediate cash outflow. The company's divestment strategy, as seen in the sale of Contacto and the initiation of production at Yumpag's pilot stope, are strategic moves that could potentially enhance future revenue streams. However, the suspension of mineral processing at Yumpag until permits are obtained introduces an element of uncertainty regarding production continuity.

The decrease in net debt and a healthy cash position are positive signs of financial stability, which can provide resilience against market volatility. The proposed dividend payment indicates confidence in the company's liquidity and commitment to shareholder returns. However, the overall decline in net income may raise concerns among investors regarding the company's future profitability, especially in the context of global market conditions and commodity prices fluctuations.

Mining Sector Analyst

The operational results from Compañia de Minas Buenaventura provide insights into the precious metals mining sector in Peru. The start of production at Yumpag and its subsequent suspension until permit acquisition is a reflection of the regulatory challenges faced by mining companies, which can affect production timelines and investor sentiment. The company's involvement in base metals through its stake in Sociedad Minera Cerro Verde diversifies its portfolio, which is beneficial for risk management. The receipt of US$146.9 million in dividends from this stake underscores the value of strategic partnerships in the mining industry.

The provision made due to the Peruvian Supreme Court ruling highlights the legal and fiscal risks inherent in the mining sector. It is essential for investors to consider such geopolitical and regulatory factors when assessing the stability and future performance of mining stocks. Buenaventura's proactive management of these risks, as evidenced by their non-core asset divestment strategy, is a critical aspect for stakeholders to monitor.

Market Research Analyst

The reported financials of Compañia de Minas Buenaventura offer a mixed perspective on the company's market position. While the increase in EBITDA suggests operational growth, the stagnation in total revenues (0% variance in FY23) could be indicative of market saturation or pricing pressures in the precious metals domain. The variance in operating income from a negative figure in FY22 to a positive in FY23 is a significant turnaround, possibly reflecting cost optimization or increased operational efficiency.

Investors may also be interested in the company's strategic decisions, such as the sale of non-core assets and the distribution of dividends, which could indicate a realignment of business focus towards more profitable or core areas. The market will likely watch the developments at Yumpag closely, as the expected resumption of mineral processing in 2Q24 could contribute to future revenue growth.

LIMA, Peru--(BUSINESS WIRE)-- 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 fourth quarter (4Q23) and full year (FY23) ended December 31, 2023. 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$).

Fourth Quarter and Full Year 2023 Highlights:

• 4Q23 EBITDA from direct operations was US$ 116.4 million, compared to US$ 76.9 million reported in 4Q22. FY23 EBITDA from direct operations reached US$ 238.3 million, compared to US$ 173.1 million reported in FY22.
• 4Q23 net loss from continuing operations reached US$ 3.0 million, compared to a US$ 56.7 million net income for the same period in 2022. FY23 net income from continuing operations was US$ 39.5 million, compared to US$ 124.4 million net income for the FY22.
• Buenaventura's cash position reached US$ 219.8 million and net debt decreased to US$ 486.8 million with an average maturity of 2.5 years by quarter’s end, December 31, 2023.
• As planned within its non-core asset divestment strategy, BVN executed the sale of Contacto to Howden for US$33.7 million.
• Production from Yumpag's pilot stope began in November 2023 producing 2.3 million ounces of silver by quarter’s end. Yumpag continued processing pilot stope ore through January 2024, after which mineral processing was suspended until definitive operating permits have been obtained, expected by the end of 1Q24. Yumpag is therefore expected to initiate mineral processing in 2Q24.
• A US$ 113.2 million provision was made in 4Q23 due to an adverse ruling by the Peruvian Supreme Court regarding tax loss carryforwards from 2009 and 2010. This provision negatively affected Buenaventura’s 4Q23 net income. However, it does not imply a cash outflow as it has already been paid.
• On December 14, 2023, Buenaventura received US$49.0 million in dividends related to its stake in Cerro Verde. The Company received a total of US$146.9 million in dividends for FY23.
• Buenaventura’s Board of Directors has proposed a dividend payment of US$ 0.0726 per share/ADS, aligned with the Company’s commitment to shareholder value.

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

	4Q23	4Q22	Var %	FY23	FY22	Var %
Total Revenues	253.8	246.4	3%	823.8	824.8	0%
Operating Income	59.9	13.0	N.A.	20.9	-39.0	N.A.
EBITDA Direct Operations (1)	116.4	76.9	51%	238.3	173.1	38%
EBITDA Including Affiliates (1)	202.2	196.4	3%	620.7	866.2	-28%
Net Income (2)	-9.8	54.1	-118%	19.9	602.6	-97%
EPS (3)	-0.04	0.21	-118%	0.08	2.37	-97%

(1)		Does not include US$ 300 million from the sale of Buenaventura’s stake in Yanacocha.
(2)		Net Income attributable to owners of the parent
(3)		As of December 31, 2023, Buenaventura had a weighted average number of shares outstanding of 253,986,867.

For a full version of Compañía de Minas Buenaventura Fourth Quarter 2023 Earnings Release, please visit: https://www.buenaventura.com/en/inversionistas/reportes-trimestrales/2023

CONFERENCE CALL INFORMATION:

Compañia de Minas Buenaventura will host a conference call on Friday, March 1, 2024, to discuss these results at 10:00 a.m. Eastern Time / 10:00 a.m. Peru Time.

To participate in the conference call, please dial:

Toll-Free US:
+1-844-481-2914

Toll International:
+1-412-317-0697

Passcode:
Ask to be joined into the Compañía de Minas Buenaventura’s call.

Webcast:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=DwEccmnH

If you would prefer to receive a call rather than dial in, please register via the following link. Please use this option 10-15 minutes prior to the conference call start time:

Call Me Link: https://hd.choruscall.com/?$Y2FsbG1lPXRydWUmcGFzc2NvZGU9JmluZm89Y29tcGFueS1lbWFpbCZyPXRydWUmYj0xNg==
Passcode: 1830770

Participants who do not wish to be interrupted to have their information gathered may have Chorus Call dial out to them by clicking on the above link, filling in the information, and pressing the green phone button at the bottom. The phone number provided will be automatically called and connected to the conference without any interruption to the participant. (Please note: Participants will be joined directly to the conference and will hear hold music until the call begins. No confirmation message will be played when joined.)

Company Description

Compañía de Minas Buenaventura S.A.A. is Peru’s largest, publicly traded precious and base metals Company and a major holder of mining rights in Peru. The Company is engaged in the exploration, mining development, processing and trade of gold, silver and other base metals via wholly-owned mines and through its participation in joint venture projects. Buenaventura currently operates several mines in Peru (Orcopampa*, Uchucchacua*, Julcani*, Tambomayo*, La Zanja*, El Brocal and Coimolache).

The Company owns 19.58% of Sociedad Minera Cerro Verde, an important Peruvian copper producer (a partnership with Freeport-McMorRan Inc. and Sumitomo Corporation).

For a printed version of the Company’s 2022 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240229467164/en/

Contacts in Lima:

Daniel Dominguez, Chief Financial Officer

+51 1 419 2540

Gabriel Salas, Head of Investor Relations

+51 1 419 2591

gabriel.salas@buenaventura.pe

Contact in New York:

Barbara Cano, InspIR Group

+1 646 452 2334

barbara@inspirgroup.com

Website: www.buenaventura.com

Source: Compañia de Minas Buenaventura S.A.A.

FAQ

What was Buenaventura's EBITDA from direct operations in 4Q23?

In 4Q23, Buenaventura's EBITDA from direct operations was US$116.4 million.

What was Buenaventura's net income from continuing operations in FY23?

Buenaventura's net income from continuing operations in FY23 was US$39.5 million.

What was Buenaventura's cash position by the end of December 31, 2023?

Buenaventura's cash position reached US$219.8 million by the end of December 31, 2023.

What provision was made in 4Q23 and why?

A US$113.2 million provision was made in 4Q23 due to an adverse ruling by the Peruvian Supreme Court regarding tax loss carryforwards from 2009 and 2010.

What dividend payment per share/ADS was proposed by Buenaventura?

Buenaventura's Board of Directors proposed a dividend payment of US$0.0726 per share/ADS.

What were Buenaventura's total revenues in 4Q23 and FY23?

In 4Q23, Buenaventura's total revenues were US$253.8 million, and in FY23, they were US$823.8 million.

What was Buenaventura's EPS in FY23?

Buenaventura's EPS in FY23 was 0.08.

What mines does Buenaventura currently operate in Peru?

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

What percentage of Sociedad Minera Cerro Verde does Buenaventura own?

Buenaventura owns 19.58% of Sociedad Minera Cerro Verde, a Peruvian copper producer.

Where can one find a printed version of Buenaventura's 2022 Form 20-F?

For a printed version of Buenaventura's 2022 Form 20-F, please contact the investor relations contacts on page 1 of the report or download the PDF file from the Company's website.