Buenaventura Mining Company Inc. (BVN)

BVN 
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Compania de Minas Buenaventura (TICKER)
Q1 2006 Earnings Conference Call
July 27, 2006 11.00 am EST

Executives:

Pete Majeski, iAdvise Corporate Communications
Roque Benavides Ganoza, Chief Executive Officer and President
Carlos E. Galvez Pinillos, Chief Financial Officer

Analysts:

Andrea Weinberg, Merrill Lynch
Abhishek Agarwal, JP Morgan
Victor Flores, HSBC
Katie Blacklock, Thames River Capital
Paul Rosenberg, Bear Stearns
Terence Ortslan, TSO and Associates
Rafael Urquía, Citigroup
Alonso Aramburu, Santander
(Damas Tentobasto, AGS?)

Presentation

Operator

Good day everyone welcome to the Minas Buenaventura Q2 earnings release conference call. Operator’s Instructions. At this time for opening remarks and introductions, I’d like to turn the conference over to Pete Majesky, with iAdvise Corporate Communications. Mr. Majesky please go ahead.

Pete Majeski, iAdvise Corporate Communications

Thank you, and good morning everyone. Welcome to Compania de Minas Buenaventura’s Q2 2006 earnings conference call. Joining us today from Lima, are Mr. Roque Benavides, Chief Executive Officer; Mr. Carlos Galvez, Chief Financial Officer; and other members of Buenaventura’s senior management. They will be discussing Buenaventura’s results for the press release distributed yesterday evening. If you’ve not yet received a copy, please call us in New York at 212-406-3694 and we will e-mail you a copy immediately. Before we begin, I would like to remind you that any forward-looking statements we made today by Buenaventura’s management are subject to various conditions and may differ materially. These conditions are outlined in the last page of the company’s press release in a disclaimer, and we ask that you refer to it for guidance. It is now my pleasure to turn the call over to Mr. Roque Benavides. Mr. Benavides, you may begin.

Roque Benavides Ganoza, Chief Executive Officer and President

Good morning and welcome to Compania de Minas Buenaventura's quarterly conference call. This quarter has been a very good quarter for us. Total revenues accounted for $168 million, 91% when compared to Q2 2005. Operating income was US$86.6 million, 212% over Q2 2005. EBITDA from our direct operations was US$84.9 million, 203% higher than in Q2 2005. EBITDA including Yanacocha and Cerro Verde accounted for $260 million, 123% over Q2 2005. Our net income totaled $138 million, 79% over 2Q 2005 and EPS were $1.09, 79% over Q2 2005. In terms of our net sales, $140 million in Q2, 97% above Q2 2005. Our average realized price of our gold US operations was $381 dollars, 5% over the same period in 2005. When we include Yanacocha, our average realized price of gold was $561, 36% over Q2 2005. Our realized price of silver was $12.14, 72% over Q2 2005 and certainly we have had better prices for lead and zinc for this quarter.

In terms of our sales content, we have produced, from our own direct operations, 117,000 ounces in this quarter, 27% higher than Q2 2005. We produced, including Yanacocha, 460,000 ounces in the quarter, 13% higher than Q2 2005 and 4,400,000 ounces in Q2 of silver, 25% higher than Q2 2005.

Our costs in net production have been in line. I would like to comment on the highlights of some of our operations. In Orcopampa, production is going very well, with costs in line with our budget. We are building a new crushing facility at Orcopampa that will enable us in time to increase some working capacity of Orcopampa. We also working on increasing the capacity of the treatment plant, in order to have additional treatment capacity. At Uchucchacua, I am very pleased to inform that we have started producing silver bars, silver bullion, and that the expansion of the metallurgical facilities is in place and we expect to be at full capacity in this plant probably by September or October. But the fact of the matter is that we are doing all this testing and the testing is looking very well. As for clarification, these additional activities will enable us to treat not only the per day load that we have at the mine, but also some off sites that we did not have the capacity to treat previously. In addition to that, we expect to treat the core entailings of the concentration plan.

At Colquijirca where we have a 34.29% economic interest, production has been in line. We are having an excellent result from (Brocal?) and we expect that by the first week of October, we will be producing copper at this mine from the copper ore that we can't use at Marcapunta at a rate of 90 tons per day of concentrate running 18-20% profit. In terms of our affiliate companies, Yanacocha had an excellent quarter and an excellent first six months. We are still heading for 2.6-2.7 million ounces of production as of the end of the year, regardless of the fact that we have had an excellent first six months and that the new project would mean higher production. We are still looking for 2.6-2.7 million ounces at Yanacocha. It is important to mention that Yanacocha has successfully issued a bond issue of $100 million in the local market and this was released two days ago. The demand for this bond was double that figure, so $200 million. We are very pleased to say that we have had very good interest rates for this bond issue. At Cerro Verde, the copper production in this quarter increased by 6% and this is still the off sites that are being exploited. We expect to have the expansion of Cerro Verde by October this year.

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