Good day, ladies and gentlemen, and welcome to the Buenaventura Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. And please note that this conference call is being recorded.I’d like to introduce your host for today's call, Mr. Rodrigo Echecopar, Investor Relations. Thank you, you may begin.

Thank you. Good morning and welcome everyone. Presenting on the call today is Mr. Victor Gobitz, CEO. Also present and available for your questions are Mr. Leandro Garcia, CFO; Mr. Juan Carlos Ortiz, Vice President of Operations; Raúl Benavides, Vice President of Business Development; and Alejandro Hermoza, Vice President of Sustainability.Before we get started, during today’s call we will make forward-looking statements that reflect the Company's current expectations about the future plans and performance. These statements rely on assumptions and estimates, and actual results may differ materially due to risk and uncertainties. I encourage you to read the full disclosure concerning forward-looking statements, which is in the press release we filed on July 25, 2019.With that, I will now turn the call over to Mr. Victor Gobitz. Please go ahead.

Thank you, Rodrigo. Good morning to all and thank you for attending this conference call. We are pleased to present our results of the second quarter of 2019 from Compañía de Minas Buenaventura. We have prepared a PowerPoint presentation, which is available in our web page.Before we go further, please take a moment to review the cautionary statement shown on Slide 2. Moving on to Slide 3, highlights were as follows. During the second quarter of 2019, Buenaventura generated $11.2 million in additional EBITDA through the company's De-Bottlenecking Program in-line with the company’s budget target as reported at the beginning of the year.Through out this program Buenaventura is increasing the efficiency of Tambomayo, Uchucchacua, El Brocal and Orcopampa mines. In this second quarter EBITDA from direct operations was $45.7 million, compared to $87.4 million reported a year ago, primarily due to a reduction in volume sold at the Company’s Orcopampa and La Zanja mines.However, showing a positive trend in comparison with the first quarter of this year 70% higher. In this second quarter adjusted EBITDA including associated companies reached $128.4 million, compared to $190.1 million in the second quarter of 2018.In this second quarter capital expenditures were $28.8 million, compared to $31.2 million for the same period in 2018, in-line with the budget target as reported at the beginning of the year considering the heavy rains during the first quarter of this year.In this second quarter net income was $9.7 million, compared to a net income of $41.3 for the same period in 2018. Buenaventura is working on developing a ten year plus business case for Uchucchacua, including Yumpaq and El Brocal mines.Also Buenaventura’s portfolio of greenfield projects is advancing well. So we intend to declare all reserves coming from San Gabriel our gold project, Yumpaq our silver project and…

Great. Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question here is from Carlos De Alba from Morgan Stanley.

Yes. Hello, this is actually Jens Spiess, how are you? I just want to make two questions. In terms of commercial, commercial deductions increased a bit this quarter. Is there any particular reason why that happened, especially compared to the last year basically? And also the realized prices you provide during your production report, do they already include the provisional pricing adjustment or not? And my second question would be regarding La Zanja, and you have decreased exploration expenses quite a bit there. And I think it was actually zero this quarter. So how can we reconcile this with the tiering plans of increasing the life of mine at La Zanja?

Thank you, Jens. Your first two questions are related to our commercial activities. And Leandro Garcia, our CFO, will be entitled to answer it.

This is Leandro Garcia. Regarding your first questions, the commercial deductions are directly directed to the current situation of the zinc concentrated market. The terms have been decreased from one year to another – to the – for next year to this one and this has affected our cost, our targets.

Current price realized.

Regarding the price, it does not include the deductions there.

No. I mean the provisional pricing adjustment, it was around $10 million, I think. Is it – it doesn't consider it, right, in the price mix?

Yes, yes. Correct. I missed that part, yes, it's included.

It's included. It's included, it's included, yes. So your third question related to regarding La Zanja. As you know, in La Zanja, we are extending the life of mine until 2021. But also we are exploring some opportunities to – through the oxide – yes, sulfide deposit. There are many options in La Zanja, we are [indiscernible] which is an underground ore body but also we have extended these analysis and these exploration program to the north part of the deposit. I don't know if, Raul, you would like to add some information regarding La Zanja.

The reason that the exploration expense has been reduced, it's because we are not drilling but we will be drilling for hydro and the logical reasons now, and we are going to drill and perhaps it’s north – it’s another bridge, but this growth is central, so that we can – we will expect to have some drilling – some more drilling coming on in the next few months.

Okay. Thank you.

You’re welcome, Jens.

[Operator Instructions] And if there are no further questions, I’d like to turn the floor back to Mr. Victor Gobitz for any closing comments. We do – I’m sorry, we do have one question that is just knocking here from John Bridges from JPMorgan. Please go ahead.

Good morning, everybody. I was just wondering with Tambomayo, I was expecting that after you commissioned the mine recently that will would see improvements in production or improvements in volumes countering reductions in grades. So I was a bit surprised to see this nice new project disappoint this quarter. Could you give us some indication as to what you expect going forwards in terms of grades and volumes from the mine?

Thank you, John. Thank you, John, for your question. That’s actually in the case Tambomayo, as we said, it’s our newest mine. But we have increased significantly the margin, in this case, the EBITDA coming from these assets through this De-bottlenecking Program. That means we have reduced the cutoff, so we have access to more areas with also good grades. And definitely, we have these counter entities. Yes, we have reduced the production of gold but we have increased the production of zinc, and we are also increasing the total capacity of the processing plant from 1,500 to 2,000 tons per day. So at the end, the borderline and the borderline is we are increasing the margins, the profitability and also extending the life of mine of Tambomayo.

So are we to expect the, sort of, improvements in EBITDA in 2020 and beyond?

Yes, that’s the case. As we – in the Slide number 6, we present our different assets that are part of our portfolio. We are very confident that we could maintain that profitability of Tambomayo. With each change, we are increasing volume, we reduced a little bit the gold production but increasing the base metal and through these exploration programs in the part of the ore deposit, we are working harder to gain visibility to extend the life of mine.

Thank you. In your prepared remarks, you spoke about positive trends in grades and the results that you see this quarter. Could you extrapolate on that and perhaps give us some indications to where you expect good news in the second half?

Yes. We can add this information but also here is Juan Carlos Ortiz, our COO, he will also explain more details regarding this.

Hi John, this Juan Ortiz from operations. One important key point here in Tambomayo for the second quarter is that we are basically having high gold inventories in deposits. As we mentioned in the previous quarter, we changed the flowsheet of the processing plant, so we are doing sanitation of the lead concentrate only from – for the lead concentrate not for 100% of the incoming ore to the plant. Deposits need these concentrated to be filtered and thus bottleneck that we are solving in June and July, but it’s not shut for June is that we still have high level of gold inventories in the field [ph]. So the production would be realized as sales in this quarter, in the third quarter of this year.As Victor mentioned, we are increasing the throughput in the processing plant. We are very close to get a license for processing 2,000 tons per day at the processing plant so it will help us to keep up with the cost reduction and looking forward maintain the margin of these operation. The grades are decreasing comparison to the last year, what we’re seeing through the high-grade spots early in the scale of the life of mine. And in the coming years, we are being focused more on the margin – I’m sorry, on the volume ounces, but on the margin that we generate per ton. And as part of the De-bottlenecking Program, we are progressing very well and the cost reduction is very substantial along the year.

Okay. Approximately how many ounces are in the lead concentrate at the mine?

Around 10,000 ounces of gold still in the lead concentrate in the field, not only lead concentrate but also in the sanitation [indiscernible] as part of gold in solution that need to be poured into a gold bar in these weeks. We expect, let me add to that, we expect to maintain in the system just 2,500 ounces of gold. It’s not yield.

And then maybe finally, Cerro Verde was disappointing this quarter. Now obviously, we can see a lower copper price impacting that. But for a company – I’m sorry, the mine of the size and quality of Cerro Verde, its grade seems to vary quite a lot and its production varies quite a lot. Is there a way – would do you expect to see happening for the rest of the year and is there a way of perhaps giving us some early warning of lower grade to put into our models?

Thank you, John. But in the case of Cerro Verde, this has decided as it’s our operational decision. In the second quarter, they decided to put most of the fleet in the stripping – in stripping activity. So they feed the processing plant with stockpiles. And as you know, sometimes stockpiles means lower copper recovery. So we expect – we see very robust operation and also a very robust financial asset. So that means that in the coming months, we expect a significant improvement in terms of production and also in – reduction in cost.

When do you expect the stripping campaign to finish?

It was done, most important objective in the second quarter. So we expect during this third quarter, a change in the – in these operational activities to return to use part of the fleet in mostly on all fresh port.

Okay. That’s good. Have you seen the, sort of, five-year plan? Do you know when that next big stripping phase begins that we can perhaps put in our models, too?

No. I don’t clearly understand your point. You are talking about Cerro Verde?

Yes. I just wondered if there was any sort of early warning as to when the next stripping phase would come. Is it two to three years away, is it a year away?

No. No, no. I don’t have these details but definitely, in terms of processing plant, it’s going very well. As we mentioned in the two processing plants, they are processing more than 400,000 metric tons. And as you know, with – in the – from the open- pit perspective, they have two different open pits. And there blending, they are part of this mining plan as usual, probably as you know, in terms of all results, Cerro Verde is an asset with a very extensive life of mine, more than 25 years. So and not any – I don’t have any concerns regarding the stability of these assets.

No. It’s just the volatility, which is a bit confusing from the analysts’ side. Many thanks. Congratulations and best of luck with the debottlenecking. Thank you.

Thank you, John

Our next question here is from Andres Castro from CrediCorp Capital. Please go ahead.

Good morning, guys. I just have a couple of questions. First one is regarding the Orcopampa focus of this year, it seems clear that you are focusing on only improving efficiency there. However, it is related to lower production for this year. My question is that if we should expect a recovery or a higher production the next year in this unit?

Okay, Andres. Thank you for your question. Definitely, we had time to improve the profitability of these assets and at the same time, we are trying to extend the life of mine to increase the feasibility. So in this regard, we have significant changes in terms of downsize the dimension, in terms of workforce and also as part of this effort to centralize our operations. But here, Juan Carlos Ortiz also, our COO, will explain with more details this concept in numbers.

Hi, Andres. This is Juan Ortiz. There has been some focusing this year for the centralization process, centralization operations in the underground mine. As a result, so far this year, we have a headcount reduction of almost 500 workers. We reduced the number of workers, the number of contractors, we are consolidating the number of contractors in the underground mine in order to have a more smooth and lean operation. The process is well advanced, we expect to finish this process along this year and pull the mine back into blue numbers in the last quarter of this year. We have guidance for this year. We haven't been working on the detail for the guidance of next year. It's a part of the budgeting process that we usually do by the last quarter of every year.

Okay. Very clear, just one last question regarding Cajamarca, I know that the tentative date of finish of the construction for this new unit is the first quarter of this year. However, I would like to know if you can share with us some guidance about how much time it would take in the – around about in that new unit.

No. We said, it's – right now, Cajamarca is in the last stage of its ramping up. So in the last quarter of this year, we'll achieve commercial production, which means that the nameplate designs. So that's…

Okay. Great. Thank you, guys.

Okay.

[Operator Instructions] If there are no further questions, I'd like to turn the floor back to Mr. Victor Gobitz for any closing comments.

Okay. Thank you everyone for joining our conference call this morning. As Buenaventura team, we are committed to developing the full potential of our existing assets through our De-bottlenecking Program, prioritizing the long-term perspective in order to become a more predictable company in terms of production and profitability. In this aspect, we consider that 2019 is a transitional year in order to achieve these goals. Furthermore, we are implementing a disciplined process of – for value generation through an enhanced methodology in order to optimize our capital allocation. In this regard, in the first half of 2020, we intend to declare all results coming from our greenfield.

This concludes today’s teleconference. You may disconnect your lines at this time. Thank you again, for your participation.