Buenaventura Mining Company Inc. (BVN)

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Compania de Minas Buenaventura (BVN)
Q1 2006 Earnings Conference Call
April 28, 2006, 11:00 a.m. ET

Executives

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

Analysts

Daniel Altman - Bear Stearns
Terence Ortslan - TSO and Associates
Tony Lesiak - UBS
Unidentified Speaker - Citigroup
Geoff Stanley - BMO Nesbitt Burns
Philippe Hervieu - Merrill Lynch

Presentation

Operator

Good day everyone welcome to the Minas Buenaventura First Quarter Earnings Release Conference Call. (Operator’s Instructions). At this time for opening remarks and introductions, I’d like to turn the call over to Pete Majesky, with iAdvise Corporate Communications. Mr. Majesky please go ahead.

Pete Majeski

Thank you Erica good morning everyone. Welcome to Compania de Minas Buenaventura’s First Quarter 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 team. 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 212-406-3690 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

Good morning to all of you. This quarter Buenaventura’s net income was $125 million or $0.98 per ADS, which represents an increase of 89% when compared to first quarter ’05. This figure includes a negative effect in mark-to-market valuation of $10.3 million. Operating income was $55.7 million, 111% higher than the figure recorded in the first quarter ‘05 due mainly to higher silver production and higher prices of silver, zinc and lead that benefited all our operations. Total EBITDA was $190.8 million, which represented a 62% increase when compared to first quarter ‘05. EBITDA from Buenaventura’s direct operations was $50.6 million, 87% higher than in first quarter ‘05.

During first quarter ‘06, net sales were $106.3 million; a 58% increase when compared to the $67.3 million reported in first quarter ‘05 due to a 24% increase in silver sales as well as higher silver, lead and zinc prices. Royalty income during first quarter ‘06 totaled $13 million, a 29% increase when compared to the $10.1 million reported in first quarter ‘05. This was due to higher sales at Yanacocha.

Buenaventura’s equity production during first quarter ‘06 was 93,144 ounces of gold, 5% higher than the 88,367 ounces reported in first quarter ‘05, and 3,314,000 ounces of silver, a 1% increase when compared to the 3,288,000 ounces reported in first quarter ‘05.

At Orcopampa, total gold production in first quarter ‘06 was 61,751 ounces, an 8% increase when compared to the 56,900 ounces in first quarter ‘05. At Uchucchacua, total silver production during first quarter ‘06 was 2,172,000 ounces, a 14% decrease when compared to the 2,536,000 ounces in first quarter ‘05. For safety reasons, the Company temporarily decided to exploit in areas that reported lower silver grades and secondly change the drilling method, which prevented from maintaining regular tonnage that is the reason for the decrease in our production. The results at Uchucchacua I assume very, very strong but due to safety reasons we are decided to go with this way.

At Antapite, total production during first quarter ‘06 was 24,900 ounces of gold, a 5% decrease when compared to the 26,300 produced in first quarter ‘05 due to a 6% decrease in the gold grade. At Colquijirca, within the local company, total zinc production was 15,500 metric tons in first quarter ‘06, a 15% increase when compared to the 13,500 metric tons in first quarter due to higher zinc grade. Total silver production during the first quarter ’06 was 1,987,000 ounces, a 140% increase when compared 831,000 ounces in the first quarter ’05. These are this year production was possible due to higher grade of silver in the area of the open pit under exploitation.

We now included our net income from non-consolidated affiliates was $92.3 million during first quarter ’06, an increase of 79% when compared to $51.5 million reported in the first quarter ’05. This increase is explained by the higher results obtained at the Yanacocha and the Cerro Verde. At the Yanacocha, the first quarter ’06 total production, total gold production was 800,000 ounces of gold, an increase of 1% when compared to first quarter ’05 production. We continue to budget 2.6 million ounces for the full year at the Yanacocha.

At Cerro Verde, the first quarter ‘05 total copper production was 22,700 metric tons, a 5% increase when compared to first quarter ’05. Capital expenditures at Cerro Verde for the first quarter ’06 were $162.6 million, of which $160 million was allocated to the construction of the primary Sulfide project. Regarding these projects, engineering is nearly complete, while advances are ahead of the schedule and within budget, despite increases in supply prices. This quarter, Buenaventura’s net income was $125 million, representing $0.98 per ADS, a 89% increase compared to first quarter ‘05. This figure includes a loss of $10.3 million, from a change in the fair value of derivative instruments. Without considering this effect, net income for the quarter was $135 million or $1.06 per ADS of share.

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