Compania de Minas Buenaventura SAA

NYSE:BVN

Q3-2023 Earnings Call

[Operator]

Good day, ladies and gentlemen, and welcome to the Compañia de Minas Buenaventura Third Quarter 2023 Earnings Conference Call. [Operator Instructions] And please note that this call is being recorded.

At this time, I'd like to introduce your host for today's call, Mr. Gabriel Salas, Investor Relations. Mr. Salas, you may begin.

[Gabriel Salas, executive]

Good morning, everyone, and thank you for joining us today to discuss our third quarter 2023 results. Today's discussion will be led by Mr. Leandro Garcia, Chief Executive Officer. Also joining our call today and available for your questions are Mr. Daniel Dominguez, Chief Financial Officer; Mr. Juan Carlos Ortiz, Vice President of Operations; Mr. Aldo Massa, Vice President of Business Development and Commercial; Mr. Alejandro Hermoza, Vice President of Sustainability; Mr. Renzo Macher, Vice President of Projects; Mr. Juan Carlos Salazar, Geology and Exploration Manager; Mr. Roque Benavides, Chairman; and Mr. Rahul Benavides, Director.

Before I hand our call over, let me first touch on a few items. On Buenaventura's website, you will find our press release that was posted yesterday after the market closed. Please note that today's remarks include forward-looking statements that are based on management's current views and assumptions.

While management believes that its assumptions, expectations and projections are reasonable in view of the currently available information, you are cautioned not to place undue reliance on these forward-looking statements. I encourage you to read the full disclosure concerning forward-looking statements within the earnings results press release issued on October 30, 2023.

Let me now turn the call to Mr. Leandro Garcia.

[Leandro Raggio, executive]

Thank you, Gabriel, and good morning to all, and thank you for joining us for today to discuss the quarterly results of the company. On Slide 2 is our cautionary statement, the important information that I encourage you to read.

We assume that you have already read the results reported yesterday. Moving on to the next slide. Our presentation will cover the five main topics shown here, and we will be followed by our Q&A session, where our team will be happy to answer your questions.

Let's begin with some overview of the key highlights for the first 9 months of 2023. Our EBITDA from direct operations for the first 9 months of 2023 has witnessed a 27% increase as compared to the same period of the previous year. It is worth mentioning that the figures do not include the $300 million obtained last year from the sale of our stake in Yanacocha.

Our cash position remains strong in third quarter 2023 due to a strong performance at El Brocal. We are pleased to share that our dividends received from Cerro Verde during the quarter have contributed to $49 million, strengthening our overall financial performance. It is important to note that Cerro Verde has a record in copper production during the third quarter '23 of 430,000 tonnes per day, representing 255 million pounds of copper.

After completing the processing plant operational readiness, we have successfully resumed operations at Uchucchacua on October 29, and also received approval for the Yumpag project's Environmental Impact Assessment on September 7, enabling Buenaventura to perform metallurgical tests for up to 125,000 tonnes of ore from Yumpag's pilot scope. We are determined with our commitment to sustainability and responsible mining practices, while fostering production.

Although operations at El Brocal, especially -- specifically, the Colquijirca Tajo Norte mine, have temporarily been suspended until the approval of the Environmental Impact Assessment. We are able to continue focusing on increasing the underground production to 12,000 tonnes per day as planned for the following 2 years.

Our consolidated production for copper, silver and gold across all the last 3 quarters has had the following results: 44,000 tonnes of fine copper, thanks to the record production at El Brocal. We are on track to achieve the upper range of the guidance; 4.9 million ounces of silver, being El Brocal its main contributor during the fourth quarter 2023, Uchucchacua and Yumpag will contribute almost with 2.8 million ounces to reach the full year guidance; 111,000 ounces of gold with a steady production El Brocal.

Moving on to our cost structure in Slide 5. You can see that our all-in sustaining costs have increased by 34% compared to the 9-month period of last year. This is primarily explained by the whole production decrease at La Zanja, Tambomayo and Coimolache. However, it is important to mention that these figures does not include El Brocal and Cerro Verde with excellent cost performance during the third quarter of 2023.

Moving on to costs applicable to sales trends. As you can see, the prioritization of copper ore at El Brocal with better operating margins is translating into a 10% cost reduction in the last quarter. Silver costs applicable to sales has increased 29% year-over-year, primarily driven by lower head grades at the Julcani and Tambomayo.

However, we expect to reduce costs during the fourth quarter of 2023 with the contribution of Uchucchacua and Yumpag silver houses. Gold cost applicable to sales has remained relatively flat year-over-year, despite the reserve depletion at La Zanja and lower production at Tambomayo.

On the next slide, we are showing the free cash flow generation. During the third quarter of 2023, we have increased our cash position to $20 million, thanks to the excellent performance from El Brocal and the dividends received from Cerro Verde.

The EBITDA to free cash flow reconciliation is explained by the following breakdown of the inflows and outlook. El Brocal, Tambomayo and Orcopampa have been the main contributors for the period of 9 months of 2023, while La Zanja, Julcani and Uchucchacua had a negative EBITDA due to lower production for the first two assets, [indiscernible] in the Uchucchacua mine. However, we expect to have a positive EBITDA for the fourth quarter, thanks to the resumption of Uchucchacua and the contribution of Yumpag.

As we have mentioned before, Buenaventura is going through growth -- in a growth phase with an expected CapEx related to Yumpag and San Gabriel. This has been partially offset by the income taxes and the dividends received from Cerro Verde.

Moving on to Slide 7. We are focusing the pipeline of the projects that has more than 10 years of life of mine. Also, we have a diversified portfolio of projects in each stage of the viability cycle, enabling Buenaventura to continuously deliver new projects in the following years.

In the following slides, I would like to illustrate our main two projects, Yumpag and San Gabriel. We are relaunching a new Uchucchacua with the Yumpag mine, almost 6 kilometers away from the current mine. This recent restart will extend the life of mine by around 15 years. Yumpag have successfully obtained its environmental permit and have submitted the financial authorization for the deposit depletion. However, in November, we are going to start processing ore from the Camila mine with a permit that allows us to treat up to 125,000 tonnes of ore from the pilot scope.

Moving on to Slide 10. In the next year, Buenaventura will be focusing most of its efforts in the San Gabriel project because it will be a relevant contributor to the company's value. It will add more than 14 years of life of mine to the company. In this slide, you can see the progress of the project quarter-by-quarter. By the following quarter, we expect to start the field work with the underground contract.

On the next slide, we are showing the earth movement activities for the processing plant facility. On Slide 11, you can see the layout of the future plan of the San Gabriel project, with its crushing equipment on the left of the picture, going through the milling and the grinding area to finally reach the carbon leach area. We expect to complete 100% of this facility by the first half of year 2025.

On the next slide, we show a couple of pictures of other components of the project that are processing and plan, such as the mine pond and water treatment plant on the top left. Also, the San Gabriel definitive campsite and the waste dump facility. On the bottom of the slide is the underground portal with its ventilation system.

Finally, I would like to finish the presentation with a couple of closing remarks. San Gabriel construction will progress faster as the main contractors are already on the project. Total CapEx for the project remains unchanged, and the start of commercial production for the second half of 2025 is maintained.

Uchucchacua was successfully restarted after 2 years of care and maintenance. Yumpag's environmental permit was approved and production will start in November. El Brocal has a record production of copper this year. Despite the open pit temporary suspension for the 9 months of 2023, El Brocal have reduced consistently copper CAS by 10%, confirming Buenaventura's effort to optimize costs.

Thank you for your attention. I will hand the call back to the operator to open for the line for questions. Operator, please go ahead.

[Operator]

[Operator Instructions] Our first question today comes from Carlos De Alba from Morgan Stanley.

[Carlos de Alba, analyst]

So first question is regarding Tambomayo. In the explanation of the production performance, it is noted that in order to reach the mine's upper zone, you were required to do more rehabilitation, and then you will be able to access this high-grade ore. When would you be in a position to reach this high-grade zone? And how much expenses -- or capitalized expenses will you have to incur in order to do so?

[Leandro Raggio, executive]

Thank you, Carlos, for your question. Actually, yes, that ore is in the upper part of the mine. But I will let Juan Ortiz to give more explanation and the time line to reach that ore. Please, Juan Carlos.

[Juan Ortiz Zevallos, executive]

Thank you, Carlos, for the question. In the upper part of Tambomayo, we are already there. We are mining that area. We expect this year to mine at a certain pace, but due to the rock condition, the ground condition, we need to slow down the rate of extraction from that -- this area. We need to do more reworks on the ground support, do ancillary accesses for the area in order to have more flexibility to mine the upper area of the mine.

So we're already there. We don't need extra CapEx to add this area into production. We're already there. The only difference is the production rate is lower than we expected. So we are carrying on this production from 2023 into 2024.

And the production in that area or the grade in that area is basically silver. It's around 5 to 7 ounces of silver, 2, 3 grams of gold. So it's a substantial production of silver coming from this area. And now we are offsetting this production with other areas of Tambomayo that are more on the gold value than the silver. That's the difference that you see in our guidance for the rest of the year 2023.

[Carlos de Alba, analyst]

Another question is on Julcani. Clearly, the mine is losing money, cash capital to sales of 26% in the third quarter. But it is mentioned that there is a new zone of gold and copper and that will begin production during the fourth quarter.

Would this -- I mean can you talk a little bit more about this zone? And what the implications would be for cost and production? Is this going to allow the mine to turn to the black and make money?

[Leandro Raggio, executive]

Yes, of course, Carlos. Actually, the difference against our budgeted production is the reconciliation of the grades -- the actual grade we are going to reach this quarter and during 2023. However, we have -- we are working on this new area called Rosario. And well, Juan Carlos will give you another -- a big picture of what is -- what are we finding there? Please, Juan Carlos.

[Juan Ortiz Zevallos, executive]

Sure Leandro. Yes. In Julcani, you see footprint, how it looks like. We have a core area at the center of the deposit, where we have the main, I would say, from a geological point of view, is the hotter area, and it's surrounded by a ring, where we have all the lead and silver mineralization.

We are producing right now and historically, we have been producing most of our recent silver production from the [indiscernible] ring, that's the [indiscernible] mine. In that mine, we are hitting now lower-than-expected grades in the stock that we have planned for 2023.

Rosario area is at the center of the deposit. So it's not far, maybe 500, 400 meters from the existing installs in the [indiscernible] area. So we share a lot of infrastructure with [indiscernible]. This area was originally mined many, many years ago in the upper levels. And now we are accessing this area now below at the [indiscernible] level. And we hit the same vein that we have some evidence in surface where we have thicker -- thickness with a higher copper and gold grade than we had in the past in the upper area.

So we have a long set of veins. Several of them are in the range of 5 grams of gold and 3%, 4% copper. So now it's something new for us. Regarding the historical portion in the last 10 years, we are developing this new area. We have by the development of this area around a small campaign of 2,000 tons of ore that we are passing in the last quarter -- in the last month of the year, maybe in December, we will process this after finishing all the pilot tests in the lab. We will do industrial test with material.

[indiscernible] ore with a value in the order of $350 to $400 per ton of value. And we believe -- we're confident by the evidence that we're having so far in the exploration and development that this area will become a significant player for Julcani in the coming 2 years. We need still to continue the exploration and develop this new area between 2024 and 2025 in order to have a substantial production asset value from this area.

So we have continuous operation from the silver areas, where we are trying to catch the high-grade -- high silver-grade areas and develop in parallel, the area of Rosario. Altogether goes to the same cost basis. That's the reason the cost of Julcani [indiscernible] a little bit higher because we are putting everything that we do as expense development in the Rosario area in the same basket as the [indiscernible] mine.

[Carlos de Alba, analyst]

Okay. So Juan Carlos, so cost will increase, but ultimately, this new area will make the mine profitable?

[Juan Ortiz Zevallos, executive]

Yes, that area -- the area. This year and the next year, we will invest in developing this area. It will take like at least 12 -- 18 months to develop and put this area into full production. To be a substantial part, maybe 25% to 30% of the contribution in production in Julcani will come from this area.

Of course, we need to complete all the tests and be sure that everything goes fine in the [indiscernible] site, along with -- we're assuming high grade for the [indiscernible] mine -- historical mine. So it's -- for the next 12, 18 months we'll have a kind of higher-than-expected costs, and then we'll deliver the additional production on Rosario mine.

[Operator]

Our next question comes from Cesar Perez-Novoa from BTG Pactual.

[Cesar Perez-Novoa, analyst]

I have two questions. The first would be on Yumpag. Buenaventura kept the fourth quarter '23 target date for start-up production unchanged. Is there a commercial volume that we should consider from this asset in the final quarter of the year? And if so, at what cost should we assume this for modeling?

And my second question relates to the Marcapunta underground mine. You're increasing production from 10,000 tonnes per day this year to 12,000 tonnes per day over the next 2 years. Could you fine-tune the date for this capacity increase and perhaps guide on the potential copper volume that we should anticipate from the asset in the future?

[Leandro Raggio, executive]

Thank you for your question. Please, Juan.

[Juan Ortiz Zevallos, executive]

Yes. On the first one, on Yumpag, we are starting a campaign of about 120,000 tonnes of ore is a part of -- is the final stage of the exploration permit. We have licensed to process around 120,000 tonnes of ore into our Uchucchacua processing plant. So we will start right -- actually we started just doing this test.

It's a very high-grade ore. It's over 20, 25 ounces of silver. So the idea is to produce -- as we put in our guidance, in the order to almost 2 million ounces of silver in the last quarter that we put in our guidance coming from this area.

[indiscernible] for this production in Yumpag in the range of $11, $12 per ounce of silver. So this is regarding Yumpag. And when we have the operational license, we'll continue mining the same ore body from 2024 in advance, at a rate of 1,000 tonnes per day, with an average rate in the order of 20 ounces, 22 ounces of silver per tonne. So it's a substantial asset for us. It's a very low cost for the combination of Yumpag and Uchucchacua mine.

Regarding El Brocal mine, we are now at a production rate in the [indiscernible] mine in the rate of 12 -- sorry, 10.5 -- almost close to 11,000 tonnes per day is on fixed. So next year, in 2024, we will -- our target is to stabilize the production in the rate of 11,000 tonnes per day in 2024 and keep developing the mine in order to increase the throughput in 2025 to around 12,000 tons per day.

So the target is to reach 12,000 tonnes per day by middle of 2025. That's the target for the throughput point of view.

Regarding copper production, because the [indiscernible] mine is purely copper player. We will be -- our bottom part, of course, is going to be a historic evolution in the rate of 50,000 tonnes of fine copper. But we are looking for opportunity to go over that, increasing not only the throughput, but also the recovery and all opportunities that we have basically on the cost side.

As you see, we are reducing the cost -- the producing cost from the [indiscernible] mine, and that's our main target. And the main target is to increase production and to decrease the cash cost of the [indiscernible] mine.

[Leandro Raggio, executive]

If I may add, there is no need to any CapEx to the plan. We have planned capacity enough to treat the 12,000 tonnes per day. All the efforts are in the mine site to extract the 12,000 tonnes per day from the mine.

[Cesar Perez-Novoa, analyst]

Okay. And just to be very clear, my connection is not very stable. But if I heard you correctly, you'll be hitting a stable production of around throughput rates of 11,000 in '24. In the middle of '25, you'll be hitting 12,000 tonnes per day and your minimum copper production would be in the range or at minimum 50,000 tonnes, right?

[Juan Ortiz Zevallos, executive]

That's correct.

[Operator]

Our next question comes from Omar Avellaneda from Prima AFP.

[Unknown Analyst]

I have a couple of questions regarding Cerro Verde. Do you expect to receive dividends during this last quarter of the year? Do you have any information regarding the tax dispute between Freeport and the Peruvian government related to these royalties?

[Leandro Raggio, executive]

Thank you, Omar, for your question. I will answer the first regarding the dividend. We know and it's known by everybody that Cerro Verde has an excellent performance. There is some room for dividends, but the decision has not been taken until yet.

So we expect, of course, some dividends, but there is no 100% confirmation. With respect of the trial in CIE, we expect news for May next year, some confirmation or some communication from the CIE of the results of this trial.

[Unknown Analyst]

Okay. And if I may, an additional question. Do you have any news regarding this consulta player process in Yumpag?

[Leandro Raggio, executive]

Yes. Well, we are working very close with the Minister of Mines. But maybe here with us is Alejandro Hermoza that can give us more color to your -- for the answer.

[Alejandro Hermoza, executive]

Yes, this process is currently under evaluation from the Social Office of the Ministry of Mines. They're evaluating all the processes that we have had in the past in that operation, and we should have some results from them or some instruction from them in the following weeks.

[Operator]

Our next question comes from [ Joslyn Jensen ] from Bluecore.

[Unknown Analyst]

Okay. I want to ask about CapEx. If you could provide us more color regarding the CapEx expected for 2024 for the growth projects and also for total and how much CapEx do you expect for Perapice? And when do you expect to start building this project? And how do you expect to fund that CapEx? We have seen that, in this quarter, you have reduced leverage. But do you expect to take more debt? Or which are the available credit lines that you already have?

[Leandro Raggio, executive]

Thank you. Thank you very much for your questions. It's a relevant issue. Well, the CapEx for 2024 will be mainly -- all the efforts will be for San Gabriel. For the sustaining CapEx, normally, Buenaventura has a budget of $80 million, Trapiche will be around 20 -- between 20 and 30, but maybe Daniel can help us with more exact figures that we are managing as today.

[Daniel Dominguez Vera, executive]

Leandro, thanks for the question. For year 2024, we are expecting a total CapEx of around $300 million. From this, San Gabriel will require between $180 million to $200 million. And for Yumpag, we will disburse around $25 million. For Trapiche, during 2024, we expect to disburse around $15 million.

Going to the second part of your question, how are we going to fund these cash requirements -- these short-term cash requirements? We count with the cash that we are generating. It's around $200 million of EBITDA. We also count with a cash position of also $200 million. We count with the dividends from Cerro Verde.

And if there is a gap that we estimate that it could be around $100 million or $150 million for a short period of time, we are very close to obtain committed revolving facilities with local banks in the order of $150 million.

We already count with $50 million for a committed line. So that will be the liquidity that we need for the funding of, basically, San Gabriel, Yumpag and our maintenance CapEx.

[Unknown Analyst]

Okay. If I understand correctly, then you said that you already have $50 million in committed credit lines. And do you expect to increase it up to $150 million?

[Daniel Dominguez Vera, executive]

Yes, that's correct.

[Operator]

Our next question comes from Tanya Jakusconek from Scotiabank.

[Tanya Jakusconek, analyst]

Great. Sorry, I fell off the line and had to dial back in. So I really apologize if you've already answered these questions. But I just wanted to know on San Gabriel, where are we on the power line permit? I thought we were going to get it in Q4 of 2023. I just wonder where we are? Did we get it yet? Or are we expecting it?

[Leandro Raggio, executive]

Thank you, Tanya. Thank you, Tanya, for your question. Renzo is with us. He can give you more detail on the process.

[Renzo Macher, executive]

Sure. We finished all the workshops with the communities. And in November, we should have the public assembly. So probably in December, we should have better news. Not better news, but news. Every thing worked fine so far.

[Tanya Jakusconek, analyst]

Okay. And then maybe, Daniel, again, I apologize if you talked about the Cerro Verde dividend. I think you had given guidance for about $120 million for this year and next. Is this something that we still should be thinking about? Or are we getting anything else from Cerro Verde this year?

[Daniel Dominguez Vera, executive]

We are very optimistic of the cash generation of Cerro Verde. They are generating $2 billion of EBITDA. They have already distributed a total of $100 million. And of course, we expect an additional dividend if the results come in the fourth quarter as we expect.

[Tanya Jakusconek, analyst]

Okay. And then can I just ask one final question, just on the Investor Day that you're hosting in New York on December 4. I'm just trying to understand -- because it's at the end of the year, and I'm just trying to understand at that Investor Day on December 4, are -- besides the updates on the assets like you're giving us and obviously, the development pipeline, will we be getting updated reserves and resources on December 4?

[Leandro Raggio, executive]

Yes, Tanya. We will have news in that day. And one -- that is one of the reasons that we postponed the Buenaventura Day for the last month of this year. So we will have news for you.

[Tanya Jakusconek, analyst]

Okay. So we will have updated year-end 2023 reserves and resources for the company?

[Leandro Raggio, executive]

Yes, correct.

[Tanya Jakusconek, analyst]

Yes. Okay. And then one other thing, will you be providing us 2024 and longer-term guidance as well at the Investor Day?

[Leandro Raggio, executive]

Yes. Yes. We will be preparing for giving you those numbers.

[Tanya Jakusconek, analyst]

Okay. Is it just -- I'm just trying to understand, is it 2024 or is it more years than 2024?

[Leandro Raggio, executive]

'24 and '25.

[Tanya Jakusconek, analyst]

And '25, Okay. And then yes. And then just I guess my final question for you is just any updates on -- just geopolitically, what's happening in Peru for us that are far away and just read what's on CNN? So maybe we could have someone who actually lives in Peru, give us an insight on what's happening.

And again, the protests that we keep reading about, et cetera. So maybe it would be really nice if someone can provide some insight into what's happening in Peru from a geopolitical standpoint, for investment, and also for anti-mining and protests. Yes.

[Leandro Raggio, executive]

Yes, Tanya, Well, things are like still -- the political situation is steady. The government, the current administration is trying to make all the efforts to book more investment, more private investment. The President, Boluarte, is having some travel, some trips while in Alemania, and this -- yesterday, the Congress authorized her to go to United States to convert and to call for investment in Peru, given the situation and given all the opportunities we have as a country.

And there is an effort from the Minister of the Economy to maintain and to pass this difficult economic situation because the lack of investment we have had in the last 2 or 3 years due to the political instability. But we are optimistic that the country is going in the right way. We think that, Otarola, the Prime Minister, is trying to politically manage the situation, the -- all the different needs that the country has.

But we are much -- we feel that we are much better than we were 1 year ago. So we are very optimistic. I don't know if here with us is, of course, our Chairman, Roque Benavides. I don't know, Roque, if you want to add some ideas?

[Roque Benavides Ganoza, executive]

Well, if I may say, the fact of having the Prime Minister -- the Minister of Mines [indiscernible] body language, if I miss it, which gave a lot of support to the industry, I think there is [indiscernible] helping the industry to develop the project. And then obviously, the recession that we are going through requires far more investment. And mining is its the main source, if I may say.

[Leandro Raggio, executive]

Thank you, Roque.

[Tanya Jakusconek, analyst]

Okay. So Roque, you think that then we are going to see a much more pro-investment support for investment in Peru going forward because of the recession and things that the current administration is doing?

[Roque Benavides Ganoza, executive]

There is no doubt about that. There is no doubt. I think the president traveling to Germany, traveling to the States in the next few days also shows the interest to attract more investments.

[Operator]

[Operator Instructions] Our next question is a follow-up from Carlos De Alba from Morgan Stanley.

[Carlos de Alba, analyst]

Yes. On El Brocal, just -- apparently, costs will be increasing in the fourth quarter as the company recognized the deferred shipping costs associated with the lead and zinc inventory. Can you provide a little bit more color on costs were somewhat elevated in the third quarter? So it would be very interesting to know what the implications will be on this comment that you mad in press release...

[Leandro Raggio, executive]

Juan Carlos, please?

[Juan Ortiz Zevallos, executive]

Yes, we have pre-striping accounts, different pre-striping in our books. That accounts for about $51 million. Because we finished the mining of the current phase of the open pit, we are speeding up the amortization of this amount of money into -- up to the end of this year.

So it's going to be accelerated amortization because the open pit finalized, not only the mining but also the processing of the ore that we broke up to September this year. So all the stockpiles are going to be processed up to December of lead zinc.

And based on that processing rate, we'll be doing the amortization of the $51 million that we have in the different stripping accounts in El Brocal mine. This is pretty much what the main impact on cost because it's a substantial amount in the coming months. It started in the third quarter. It's going to follow the same rate of amortization in this fourth quarter of this year.

[Operator]

Our next question comes from Rodrigo Marietta from AFP Integra.

[Unknown Analyst]

One question. What are the actions you're actually taking to start San Gabriel in the second half of 2025?

[Leandro Raggio, executive]

Sorry, Rodrigo, I didn't hear your question as well as I want. Can you repeat it?

[Unknown Analyst]

Yes, of course. So what -- can you explain more maybe on the actions you are taking to start production of San Gabriel in the second half of 2025? Because the construction percentage of the CapEx you already been deploying, I think, 14%. And you changed your guidance. So maybe if you can give a little more on where the action you are doing right now? And if you don't expect any issues with communities? For example, where the actions with communities, so CapEx could be deployed efficiently or not?

[Leandro Raggio, executive]

Okay. Thank you. Thank you for your question, Rodrigo. Renzo, maybe you can talk about with you answer.

[Renzo Macher, executive]

Sure. Sure. Thanks for the question. So this year has been a year where we focused on all the preconstruction services and -- so we can receive the main construction teams on site. So by the end of this year, you should have become very much terminated the contractors on the field for the mine work -- or we are assigning the S&P contract and the concrete installation from November.

So we're going to be focusing on full construction activities during the whole 2024. In parallel, we started our operation readiness group. So we're going to clearly towards -- a year from now, we're going to have all the manuals. And we're going to start training our people so we can initiate commissioning to the first quarter or second quarter of 2025.

And in the social aspect, I think we were in good forms with the communities. No major problems in there. We keep working with them. We have like -- 30% of our people are from within the region, and so we have a good relationship -- contract relationship, work relationship with the communities.

[Unknown Analyst]

Okay. And one additional question. Do you have concerns about the El Nino phenomenon for next year? Your communities have told you something? What are your current conversations about that topic?

[Leandro Raggio, executive]

Thank you, Rodrigo. Yes, this is important issue that we have been discussing changes. April this year, we are working very closely to -- with our operations, we are defining all the critical aspects of the -- how the mine effect can affect us.

And we have a plan to alleviate all the damage that can be done by this phenomenon. We are working with our manager of safety. And internally, we are coordinating with all the areas to be prepared for this plan.

[Unknown Analyst]

Okay. And as now, do you have an estimation of how much would you spend to alleviate any circumstances due to this phenomenon? Or you're on -- or do you have any estimations nowadays?

[Leandro Raggio, executive]

Well, we are looking -- yes, primarily, we are reviewing our capacity of -- to have the stock -- the inventories of our concentrates. We are viewing also we are reviewing the alternative routes that the way we have to access our mines. So we are focusing in the two main issues, to -- all the inflow of material we need and how we are going to get out with our concentrate.

So we are planning which are the routes that we can use to establish how good and how prepared are the alternative routes that routes that we have today and also the capacity of how much stock we will have in our -- for our concentrates and how stock -- we need increase, if any, of all our parts and equipment and material we need to continue the production.

[Operator]

Our next question comes from Juan Cruz from Morgan Stanley.

[Unknown Analyst]

In light of the CapEx and the projects that you have planned for the next few years, can you tell us what is the minimum cash level that you feel comfortable holding, given where we are in the cycle? And also, how are you guys thinking about the bond maturity in 2026?

Understanding that there's still enough time to figure out a plan, but given where we are in the rates environment, how much that cost you now? And what would the potential refinancing costs could be? How are you thinking about that, if you are?

[Leandro Raggio, executive]

Thank you Juan for your question. Daniel, can come up with the answer.

[Daniel Dominguez Vera, executive]

Thanks for the question. For the minimum cash that we consider, we normally estimate 2 months of OpEx, which is around $50 million. So that would be our minimum cash. That's the first question.

The second question is -- the second answer for your second question is, of course, we have a plan for the bond maturity, which is in 2026 in July. We are considering starting the renewal process at the beginning of year 2025. So we should count with a facility or a bond renewal plan executed by July 2025. We are evaluating the -- of course, the interest rates. As of now, they are in a very high level, but we expect that in the year 2025, by midyear, they should have decreased substantially.

[Unknown Analyst]

Okay. And just as a follow-up, given where your cash balance is, which is a healthy one right now at $220-something million, at least as of September, should we expect that you come close to your minimum at any point? Or that's not in the cards?

[Daniel Dominguez Vera, executive]

No. If we are going -- we are getting close to our minimum, we will exercise our -- the liquidity that we have with the local banks.

[Unknown Analyst]

And those facilities are committed?

[Daniel Dominguez Vera, executive]

We have one which is committed. And the other one, we are looking for to be committed as well.

[Unknown Analyst]

Okay. So that's the -- ideally, up to $150 million?

[Daniel Dominguez Vera, executive]

Exactly.

[Operator]

And our next question comes from Joslyn Jensen as a followup.

[Unknown Analyst]

Okay. Just regarding production and the strategy you have going forward. And your expectations for this year in Uchucchacua and Yumpag will produce around, well, up to 2.8 million tonnes just in the -- you're assuming that, that will be just in the fourth quarter?

[Leandro Raggio, executive]

Joslyn, million ounces no?

[Unknown Analyst]

Yes. Yes. Sorry. Million ounces of silver.

[Leandro Raggio, executive]

Juan Carlos, please go ahead.

[Juan Ortiz Zevallos, executive]

Yes. Yes, this is our guidance. As I mentioned, Yumpag is going to be processing this year around 100,000 tonnes, 90,000 to 100,000 tonnes of core, with a grade over 25 ounces of silver per tonne this year.

And Uchucchacua will be processing also around the same figure, around 90,000 to 100,000 tonnes of ore in the area of 10 ounces of silver per tonne equivalent because it's a combination of poly metallic -- basically polymetallic gold with silver, lead and zinc. That equivalent grade of that material is in the order of 10 ounces of silver equivalent.

So the combination of both that will be processed in campaigns, in batches in the Uchucchacua processing plant will bring us into the order of 2.5 million, 2.8 million ounces of silver by this last quarter of the year.

[Unknown Analyst]

And it will be correct, like to multiply it by 4 to get to that 2024 number more or less or not?

[Juan Ortiz Zevallos, executive]

In the case of Uchucchacua, yes. In the case of Yumpag, probably we will be getting closer to the average grade of the deposit is more in the range of 20 to 22 ounces is the average. In terms of mine, instead of 25 ounces that we are putting ahead of time speaking out production for 2023. So it will be a little bit less production from Yumpag next year.

[Unknown Analyst]

Okay. And going forward, I saw in your presentation from Q2 that you are expecting to reduce the operating units. Could you give us more color about it, which operate operating units are you thinking to close.

[Leandro Raggio, executive]

This is how it is in our presentation of the second quarter?

[Unknown Analyst]

Yes.

[Leandro Raggio, executive]

Well, we don't foresee any current operations to close. It is known by the market that we are struggling with reserves in Orcopampa and Tambomayo due to different reasons, but it's -- and -- maybe is that the reference you have, but however...

[Unknown Analyst]

Well, it says like -- what -- whether it's in the precise is that you will have -- that you actually have 7 operations, and then you will reduce to 5 operations in 2026 and to -- between 3 and 5 by 2030?

[Leandro Raggio, executive]

Well, we are concentrated in units that we can support. At least we are concentrating in operations in mines that have more than 10 years of life of mine. All the efforts are to increase the long life of our mines. And the strategy is to concentrate in those type of mines.

So in the time, if any of the current mine doesn't have that characteristic, in that moment, we will decide to close -- to sell -- to -- not continue working in that mine. But our strategy is to focus on mines that have more than 10 years of life of mine. That is the message.

[Unknown Analyst]

Okay. And the revenue mix will still be 50-50 between base metals and precious metals?

[Leandro Raggio, executive]

We foresee a little change. We were going to be more concentrated in sales coming from copper. It could be around 55%, 60% of our revenue coming from copper in the following year. Due to the increase in El Brocal well, the support of Cerro Verde and also the decreased production that we expect for Orcopampa and Tambomayo somehow offset, of course, by our new project of San Gabriel. In terms of precious metals, we supported by San Gabriel and Yumpag and Uchucchacua.

[Operator]

And ladies and gentlemen, with that, we'll be concluding today's audio question-and-answer session. I'd like to turn the floor back over to management for any offline questions.

[Gabriel Salas, executive]

Thank you, operator. The first question comes from Lei Munoz from Forte Capital. What is the level of engineering of San Gabriel, detailed engineering at what percentage? And the CapEx for San Gabriel includes the working capital of the ramp-up?

[Leandro Raggio, executive]

Thank you, Len. Renzo can give us more color for that question.

[Renzo Macher, executive]

Sure. So we're currently at 90% completion of the engineering at this point, kind of indicates that we have enough engineering to place all the purchase orders and service orders. And the remaining 10% is usually field engineering. So support of changes during the construction.

And to the second question, yes, it does include the working capital, everything it needs until we move to commercial construction.

[Gabriel Salas, executive]

Thanks, Renzo. The second question comes from Tim Lambert from Lumi Sales. What is the time line for the assumption of mining at Tajo Norte?

[Juan Ortiz Zevallos, executive]

We are planning to resume operation of open pit depending on the permits and the time line for getting all the permits done. But our target is to be receiving by 2026. Production from the open pit to reprocessing plant by the end of 2026, early 2027.

[Gabriel Salas, executive]

Thanks, Juan Carlos. The third question comes from Javier de Romania from Nicolas Partners. What guarantees the company have given against the credit lines?

[Daniel Dominguez Vera, executive]

These credit lines are unsecured. We don't foresee any guarantees related to these credit lines or any revolving facility that we can obtain for the following years.

[Gabriel Salas, executive]

Thanks, Daniel. At this time, there are no further questions. I would like to turn the call over to the operator.

[Operator]

Thank you. At this time, we'll close today's question-and-answer session for both audio and offline questions. And I'd like to turn the floor back over to Mr. Garcia for any closing remarks.

[Leandro Raggio, executive]

Thank you, operator. Before we finish today with our conference call, I'd like to thank you all very much for making the time to be with us. I would also like to remind everyone that we are organizing our Investor Day on December 4 in New York, and you are cordially invited. Thank you again. Thank you very much.

[Operator]

Ladies and gentlemen, that concludes Buenaventura's Third Quarter 2023 Earnings Results Conference Call. We would like to thank you again for your participation. You may now disconnect your lines.