Good morning. My name is Tracy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Buenaventura Results Conference Call. [Operator Instructions] Thank you for your attention. I would now like to turn the call over to Barbara Cano of MBS Value Partners. Please go ahead.

Thank you, Tracy, and good morning, everyone. Welcome to Compañía de Minas Buenaventura Fourth Quarter 2016 Earnings Conference Call. Please be advised that today's call is for investors and analysts only. Therefore, questions from the media will not be taken. Presenting on the call today for us from Lima, Peru, is Mr. Roque Benavides, Chairman. Also present on today's call and available for your questions are Mr. Víctor Gobitz, Chief Executive Officer; Mr. Carlos Galvez, Chief Financial Officer; and Mr. Igor Gonzáles, Chief Operating Officer. They will be discussing the results per the press release distributed yesterday. If you have not yet received a copy of the earnings report, please visit buenaventura.com, where there is also a webcast presentation to accompany the discussion during this call. Should you need any assistance at all, please contact MBS Value Partners in New York at (212) 661-2232. Before we begin, I’d like to remind you that during this call, comments made by management may include forward-looking statements, which are subject to various conditions and uncertainties based on a variety of factors. These forward-looking statements may differ materially from actual results. We therefore ask that you refer to the disclaimer located within the earnings release prior to making any investment decisions. I'd now like to turn the call over to Mr. Roque Benavides, Chairman of Buenaventura, for his presentation. Mr. Benavides, please go ahead.

Thank you, and welcome to Buenaventura's end-of-the-year conference call. We are together, at this time, with Víctor Gobitz, who is our new CEO, but he has asked me to make the presentation, but he will be participating, and obviously, answering the questions that you may have, together with the management team of Buenaventura that's joined us this morning. I will present with the presentation that we have submitted to investors. And so I will not be following the press release, as this presentation contains all the aspects that are included in this press release. In the fourth quarter 2016 and for the full year 2016, we are very pleased to inform that production was in line with the guidance that we gave at the starting of this year. We have achieved lower costs and remain sustainable in terms of all-in sustaining cost of $846 per ounce, with a very positive results in our brownfield exploration, especially in Orcopampa and Uchucchacua, and we are quite excited about this result. Tambomayo produced its first doré bar on December 30, and we have had the process of the ramp-up, and we expect that by the end of the first quarter of 2017, we will be in full production. In the fourth quarter 2016, the EBITDA from Brocal was $23.9 million, showing an important improvement in this operation. As we have mentioned in previous conference calls, the ramp-up of Brocal has been quite difficult, and the team, led by Gonzalo Eyzaguirre, who is also present here, has shown results and the fact that we have generated positive EBITDA as of the end of 2016 with the declining metal prices has been a very positive aspect. We had to account for non-cash impairment of $388 million from Yanacocha that has taken us to a loss…

[Operator Instructions] And your first question is from Carlos De Alba from Morgan Stanley.

Could you please give us some sort of guidance in terms of the cash or cash cost for the different operations? That would be important in 2017, just to see if some of the progress that you have done in the last 2 years will continue or we should see a more stable cash cost now.

Carlos, thank you for your question. Carlos and Igor will answer it. Carlos E. Gálvez: The point is -- we have renewed our cost applicable to sales to the different operations. And in the case of Orcopampa, we are going to continue producing in the same level, no differences. In the case of Coimolache, at our site, we continue to add. In the case of La Zanja, it could be pretty higher due to the lower ounces we are forecasting. In the case of Yanacocha, this could be pretty higher, at about 10% or 15%, due to the lower gold produced. In the case of our silver operations, Uchucchacua we continue controlling the cost applicable to sales. We -- you know that we are going to have a full year of production at 3,850 [ph] tons throughput per day, that will help. We just mentioned a guidance of a [indiscernible] '17, but this silver mine is preferred to produce up to 80 [ph] million ounces in the year. So this will help. In the case of Mallay, that we are introducing the new bench and fill method to exploit in areas with wider veins. We believe these are, cost applicable to sales will be lower than the average we have achieved. We have already achieved an amount about $9.90 per ounce of silver due to this variation. We have to confirm that we can continue producing at this level to report something in about $10, $10.50 per ounce. In the case of Julcani, we believe that with the only exception of this first quarter, that we are going -- we are reducing some our productivity due to a variation in the exploitation methods that we are using [indiscernible] due to safety conditions. We are going to resume the level of production with some equipment we are introducing to this operation, and we are going to produce in the order of $11.50 per ounce. In the case of Tambomayo, I would prefer not to mention a final figure until getting the level of production. You know that we are in the ramp-up, we are just picking, for the time being, materials that we have in the stockpile with lower grades. So until it's confirmed that everything is working smoothly in our operation, we are going to adjust and deliver our guidance of cost applicable to sales. We feel very good about the cost applicable to sales in our Brocal operation, and I would prefer Gonzalo to share this cost applicable to sales guidance.

This for Brocal, because the cost will increase around 10%, probably less than 10%. And the reason is that the rates in copper will decrease. Last year, we had a rate of 2.09% in copper. For this year, we are expecting a rate of 1.8%. And the other reason is the stripping ratio. The stripping ratio for 2016 in our pit was 7:1, and that will increase in 2017 in 8.5:1. So those are the big reasons for that increase. And what we are doing to control parts of that is we are building a new tunnel in our underground mine. The name of that tunnel is the Esperanza [ph] tunnel, and with that, we're going to decrease the distance, the hauling distance. So that will help us in controlling part of the underground cost.

Perfect. And just, Carlos or Roque, do you have any comments on perhaps the cash cost expected at Quecher?

No, I think it's too early to say. And no, we don't have a figure for that.

Okay. And then finally, Carlos, if I may. In the last quarter last year, the working capital numbers were very strong and that allowed the company to post very strong cash flow operations numbers. How do you see that progressing, at least in the first half of this year? Do you think that some of these levels will be sustainable? Or could you actually bring them down even more and generate more cash flow? Carlos E. Gálvez: Well, we expect to derive much more cash flow from the second quarter onwards. You know that this ramp-up in Tambomayo means that we are -- we have a very reduced production and sale of gold in this first quarter, but we continue expanding for this working capital. So from April onwards, we are going to build a better cash position.

And your next question comes from the line of Botir Sharipov from HSBC.

A couple of them, first for Carlos. Carlos, just if you can maybe clarify for us, it seems like that when Newmont took the impairment charge a few days ago at Yanacocha, they were able to deduct taxes from that impairment charge. You guys didn't seem to, which resulted in higher bottom line loss. Is that because of the difference between IFRS and U.S. GAAP? If you could maybe first elaborate on that. Carlos E. Gálvez: Well, you have to bear in mind that what we do is to include our equity accounting. So we do not have any tax impact in our financial statement. This is the result of Yanacocha's financial statement. And this is for the financial accounting, not for the tax accounting.

So when you do it on a subsidiary, just again to clarify, as the associates line in income statement, don't you take out taxes first on a subsidiary level before bringing it into the income statement and then just when you actually calculate consolidated taxes, you just don't deduct taxes twice? Or do you not need to deduct [ph] taxes at all? Carlos E. Gálvez: What happens is that we take the net income after taxes, but what it is important to bear in mind is that the impairments that come from reclamation costs is only deductible once you expend the money, not when you provision that.

Okay, great. That makes it more clear. Then I guess a bit more strategic question. Given the reclamation liability at Yanacocha have increased, and on the other hand, Quecher Main is taking shape and sulfide opportunities, quite a few of them there that I think could extend the mine life to maybe 2030 and beyond. What's your stance on consolidating Yanacocha? How has Newmont's view changed on Yanacocha's future? Are they looking to continue their presence in Peru? In the past, they sold their Mexican operations to Fresnillo, or part of it. All these events, how have they changed your stance and maybe Newmont's stance on their presence in Peru?

We were visiting Newmont in Denver, together with Víctor Gobitz and Raul Benavides and Carlos Santa Cruz that is now in charge of Buenaventura Ingenieros. The 4 of us traveled to Denver. And among other things that were very positive is that we found that the management team of Newmont quite excited about Yanacocha in terms of the development of the sulfides. We have increased resources during 2016, and we continue exploring in terms of sulfides. Our impression, my impression, was that Gary Goldberg was quite enthusiastic about Yanacocha towards the future. And in addition to that, if I may say, finally, they are also excited about Chaquicocha underground. And I think they are building an additional drift to develop the oxides at Chaquicocha. I think Yanacocha is one of its class in the world. You have to bear in mind that we have produced in excess of 35 million ounces in the last 20 years, or 20 and more years. And as we say in mining, in elephant land, there is more than 1 elephant and my impression is that in Newmont finally there is an interest and they are not interested in selling. They are interested in developing the resources as they are -- I don't know if Victor wants to comment on that. Víctor Colchado: Thank you, Roque. Let me comment and add some comment about that. Quecher Main is by far a bridge. It's an oxide deposit, it's a bridge to develop the sulfide project. The sulfide project in Yanacocha is huge. It's, clearly, it's a long-term plan for Yanacocha, and it's using the current footprint, that's a key point, a technical point. Using the current footprint, it will reduce some social problems and probably speed up the decisions in the future of all these projects.

And in addition, we will review the reclamation cost in using that same footprint. Yes, exactly, and I think that is a very important point that Víctor made in our conversations with our friends at Newmont, yes.

Great. Just 2 quick final questions.

What was that? Sorry?

Okay, 2 quick last questions here. One is on San Gabriel. Are you guys determined to proceed with the project? The concern is, obviously, that the CapEx is pretty high at $500 million and there are still no reserves from what I understand. And just we've seen quite a few examples in this industry when people put the money into ground, building the mines with the underground resources, and unfortunately, find out down the line that it's not all what it's thought out to be. In general, just given the fact that the mine is still -- mine life is still fairly short, are you guys determined to go ahead with it once you get the EIS approved?

Igor will answer that, this question.

Yes, our -- we're trying to be as cautious as possible in San Gabriel. And that's the reason why this last year, in 2016, we developed a ramp into a section of the ore body. We did a quite a few meters of drilling, sampling. We did metallurgical work, geotechnical work. We reviewed our model, our geological model. And all that is coming together at the end of the -- this first quarter. We also are doing quality control and quality assurance on all our numbers and assays to ensure that the validity of our results. And if our results, like Roque mentioned, are proven to be economical, then the next phase is to proceed with engineering. And it's precisely in the engineering phase where we're going to try to optimize capital as much as we can, as we want to build the project once the engineering is fairly complete and not take any chances on the project.

Great. One last quick one, Cerro Verde production guidance. It seems like you guys are saying now 500 to 550 for 2017, whereas I think in the Q4 production release, it was 550 to 600. Could you maybe clarify what is the actual guidance for this year, for the production? Carlos E. Gálvez: The guidance of Cerro Verde production is mainly 1.2 billion pounds of copper. Well, whichever variation is due to certain efficiencies, grades and so on, and that depends on the front of the pick [ph] is operated. But mainly, this is the guidance.

If I may add to that, in a deposit like Cerro Verde, you cannot see the very short term. The thing is there are grades that come into the plan that may be lower in the short term, but that will be compensated in the medium to long-term. So it is difficult to say, but in any event, this mine is managed by throughput and I would recommend checking with their guidance as well. Carlos E. Gálvez: Let me add something, Roque. Also, it's important to mention that on Page 7, the copper production of Buenaventura attributable, it's partly related to El Brocal copper. Yes, we are increasing the production this year. Probably you can explain that.

That's right. We're increasing the production from 50,000 tons to 55,000 tons in 2017. And the reason of that is that we're increasing the underground production of copper from around 8,000 tons per day to 17,000 tons per day. That will happen by the end of the year. And we're investing money to make those changes in the underground mine. And also to improve the production of our copper plant. So that's the reason that's increasing -- that increase is going to happen.

[Operator Instructions] The next question is from Ricardo Miranda from LarrainVial.

I have a question regarding financing. As you mentioned, you plan to invest in [indiscernible] including Trapiche, San Gabriel and also probably further, when you start developing the Quecher project. So I would like to ask how would you finance that? If it will be with direct EBITDA generation or are you planning to issue debt?

Quecher is within Yanacocha, and we have to go -- I know that financiers are always in a faster pace, but we have to go step-by-step, and that applies, obviously, to Quecher, but also applies to our projects. One thing that we mentioned last year was that one of our priorities was to preserve cash and that we will be developing the projects step-by-step, and depending on the cash generation of the company and the possibilities of raising debt, if possible. The projects will be developed in such a way, and we are not going to put pressure to our financials in order to develop the projects.

If I might add, this is Igor, if I might add, for example, just like I explained in the case of San Gabriel, in the case of Trapiche, what we have done is we have, as Roque indicated, we have done optimization of the leaching phase or the leaching material of the project, and inside a project that is with the reduced capital. And that project we'll take forward into the prefeasibility stage. So we are being, again, prudent and taking every step to ensure that what we build is going to be within our reach. In addition to that, we are also being as careful as possible to resolve all the community issues before we engage into a construction activity in either project. So that's very important in this part of the world. And we're trying to make sure that we resolve all community issues before we initiate any construction activity.

For example for Quecher, you don't think that probably the mine will be or you'll try to issue a shareholder amount, like you did in Cerro Verde?

In Yanacocha, they hold $600 million to $700 million in cash, which, obviously, is there for the closure and for other projects. The thing is if we have a project like Quecher, that can delay the closure process, we may use that cash for the development of Quecher. But this is a speculation, no? The thing is we'll see. We don't know yet how much the project will cost and how we will develop it. So I think it's early stages to say, yes.

[Operator Instructions] And there is one question waiting from Scott MacDonald from Scotiabank.

I just have one on Cerro Verde, again. And then one, just again, about your all-in sustaining costs. So just on Cerro Verde, we saw Freeport, their unit cost guidance was up a bit this year. I assume that's because of the lower grades you kind of referred to earlier? Can you give us a sense of long term, what you see as the sort of run rate cash cost?

Difficult to say, yes? I think the impact of the expansion has been dramatically positive. If I may say, with $1.30 per pound of copper. I would say that, this is a guesstimate, that it will be probably in average $1.50, but it will depend on how deep the pit gets in time. It's difficult to say. But it is a very, very efficient operation. Compared to other operations in the world, it's a world-class deposit.

Okay. Sorry, that's $1.50 sort of long-term average, so up a little bit compared to 2016?

I would say so. You see the open pit deepen and the haulage cost increases somewhat. But as I said, this is a guesstimate, nothing else.

Yes, fair enough. And I think you mentioned in a prior quarter that about $70 million per quarter of CapEx is kind of the normal run rate, give or take?

Yes, that is the figure we have given, and that is what we expect in Cerro Verde.

Okay. And you mentioned last quarter that you may start getting dividends out of Cerro Verde. Can you give us an update on that?

We are looking forward to that. But no, no. The thing is, seriously speaking, Freeport has prioritized paying back the debt. And in that respect, they have suggested that the debt in Cerro Verde will be over by 2019. And then obviously, a strong dividend will come into the partners. What we have been given as information as well is that they are starting to repay the loans that the shareholders gave them as of the end of 2015, and this will start in March this year. We are expecting $18 million coming from Cerro Verde as a first payment of their repayment of the loan that shareholders, and in this case specifically, Buenaventura gave to Cerro Verde. Carlos E. Gálvez: And this decision will be reviewed considering the prices of copper [indiscernible] and the performance of this operations.

Okay. So you may not be getting dividends, but you'll be getting repayment through your shareholder loan soon?

Yes, yes.

Can you remind us what -- how much the shareholder loan balance from you is?

The thing is, we lent $160 million -- 100? Carlos E. Gálvez: The total is $600 million.

No, at Buenaventura. Carlos E. Gálvez: $126 million.

$126 million we lent. Altogether, it was $600 million. Our share was $126 million and that was December 2015. And we are starting to get paid back with $18 million in March.

Okay. And so would you expect that sort of to continue each quarter, along with the other debt repayments?

We will promote that, obviously. We will promote that they pay us back. But the thing is that, seriously speaking, the thing is Freeport is in charge, and they have suggested that they want to pay the bank loans first, and then obviously, our loans are subordinated to the bank loans.

Great. So just moving on to your unit cost. You kind of talked a bit about your cost of sales for each of the operations. Could you give us a sense of your expectations of your all-in sustaining costs for the year and maybe your CapEx for the year? I guess, assuming sort of current mental prices hold. Carlos E. Gálvez: Yes, in terms of the all-in sustaining cost, there is no devaluation, because our operations being the majority on the ground, require very reduced CapEx, and sustaining CapEx. On the other hand, after reviewing the fact that in the last quarter or in the second half of this year, we should have the full engineering of San Gabriel. That means that during the year, we're going to have only the sustaining CapEx and engineering expenses. So at the most, our CapEx full year will be in between $170 million to $180 million. So we feel comfortable in managing this cash.

Okay, so that's -- and that $170 million to $180 million, that's excluding Cerro Verde and Yanacocha and San Gabriel?

Yes. It includes the engineering of San Gabriel.

Right, but not the construction.

It doesn't include any construction activity.

There are no further questions waiting. So I would now like to turn the call over to management for closing remarks.

Thank you for attending this conference call. And as I said earlier, we are very pleased that Víctor Gobitz is with us, has joined this team, and we are working with him. We are making him work very hard. And I wanted to let you know that we are traveling on Saturday night to Toronto, and we will be attending PDAC on Sunday and Monday. Personally, I'm a speaker at the conference at, I think, 9:00 in the morning, and Víctor Gobitz will be participating in the Peruvian Day as a panelist. And so we will be in touch with our investors in Canada and those that attend PDAC. And then we will be traveling to Boston on Monday night and be in Boston all month -- all Tuesday. And then we will be presenting in New York City on Wednesday, early in the morning. If any of you happen to be around and want to attend and have not been invited, which I will be surprised, but please let us know. We will be presenting at the New York Palace, I think, at 8:00 in the morning on Wednesday next week. With that, thank you again for attending this conference, and assuring you that we continue working with great optimism of mining, of Buenaventura and certainly of Peru. Thank you very much.

Thank you. Ladies and gentlemen, that does conclude your presentation for today. You may now disconnect. Thank you for joining, and enjoy the rest of your day.