Compañía de Minas Buenaventura S.A.A. (BVN) Earnings Call Transcript & Summary

Good afternoon to all. Thank you for attending our Buenaventura Day. Let me start with, as usual, with the -- this cautionary statement because, as you know, we are a public company. Going to the Page 3. Here, you can see our agenda for this presentation. The first 2 topics, the description of our Board members and management team as well as Peru political and economic outlook will be presented by Mr. Roque Benavides, our Chairman; and all the other topics will be covered by our management team. Let me point out that in the fourth topic, it's the first time that we are presenting this key component of our strategy, which is sustainability. For that reason, our Vice President of Sustainability, Alejandro Hermoza, is here in this presentation. Okay. Roque, go ahead.

Good afternoon, and thank you for attending this conference. We do understand that with coronavirus and all this market's turmoil, it's probably more difficult for you to be here. So we appreciate very much you being here. It's a couple of slides on the Board of Buenaventura and the management team. We essentially are the same people that we presented last year. There is one modification. Mr. Germán Suárez resigned to the Board. He was over 75 years old, and he decided to retire from the Board. And the Board nominated Mr. Marco Antonio Zaldívar as a Board member of the company. Marco Antonio Zaldívar is a man that has worked for Arthur Andersen first and EY now or until he retired from executive -- from the executive position. And he's a man that knows the company. We believe that he brings the expertise of an auditor, and he will be integrating the audit committee. And the other members, obviously, Felipe Ortiz de Zevallos, a well-known businessperson and Founder of APOYO, the main think tank in Peru. Dr. José Miguel Morales, who is a lawyer and specialized in mining. Diego De La Torre, also a businessman, well known for his interest in sustainability, precisely. He is part of the Global Pact of the United Nations, and he brings also his expertise in that respect. Bill Champion, who used to work for Freeport-McMoRan. He's a man that knows about the copper industry. He's a metallurgical engineer, but he has worked in mining all his life. Nicole Bernex is an academic. She is the Head of the Geography and Environmental Faculty of the Catholic University in Peru. She is a very, very respected person also in terms of sustainability. And Marco Antonio Zaldívar. So these are the people that are members of the Board, and we are presenting this group for reelection in our shareholders' meeting that is going to be held as of the end of March. And the management team, most of them are present here. The only one that is not present is Raúl Benavides, and he was celebrating his birthday on Saturday night. So probably he's still celebrating. No, no, no. Simply that we selected a group to make the presentations. And Victor will be presenting some of the projects that Raúl deals with. And I'm sure that he will do a good job in that respect. In terms of what has happened in Peru in the last few years or in the last year, probably more important is coronavirus and the problem within markets, how this has happened in the last few days. But those are things that we cannot control. What we can explain in this presentation is the interest of Peru to be part of the OECD countries. And the objective is to be part of those countries that are performing better. We would like to be part of that group. Essentially, we are doing very well in terms of macroeconomic environment, but we are still missing a number of aspects as institutional framework, and that is, obviously, one of the points that we need to work as a country. Public infrastructure is also missing. Human capital, labor, markets and sophistication of markets, we're still missing those. But in terms of macroeconomic environment, we are a country with growth rate. We have been growing for the last 20 years, and we have a low inflation rate. And if we compare with the countries of the alliance of the Pacific, mainly Mexico, Colombia, Peru and Chile, we are also lacking some infrastructure in terms of electricity, in terms of ports, in terms of air transportation, railways, roads, and we are working in that respect in Peru. The Peru, obviously, continues to be a promarket environment. We have not faced some of the problems that some of our neighbors are facing in the case of Chile, Bolivia, Argentina. The Latin American region is facing problems, and Peru is coping with those. We believe that the reason for that is that we have worked essentially free trade agreements with 2/3 of global GDP in the last few years. And in each of those free trade agreements, there is a chapter on defense of investment. In Peru, investment is secure, and we believe that, that is a very strong point for us. In addition to that, we are one of the few countries that has investment-grade that we are part of the Alliance of the Pacific. And finally, that we have a Central Bank that is probably one of the most independent central banks in the world, and one of -- that has the most -- one of the most renowned Chairman's that is Mr. Julio Velarde that has been nominated as the best central banker of the world. Coming from a small country, it is something to be taken into consideration. And that, obviously, is -- if I can point this, Peru has a low inflation and has a growth rate that has been going on for the last few years. In terms of the location, we believe that we are very strategically located in the Pacific Basin. Obviously, with connections with the U.S., North America, China, and I don't know if today the connection with China is all that good. But anyway, it's where the markets are, and, obviously, Europe and the rest of the world. We are important metal producers. We are #6 in terms of gold production; #2 in silver, in copper. We are second in zinc as well and fourth in lead. So this is a very important metal producer in the world. There is some disparities in terms of growth and, obviously, the coast of Peru is far more developed than the highlands, the mountains, the Andes and the jungle. And we essentially work in the highlands. And many times, people say, "Why is that there is so much confrontation in Peru?" Well, there is disparities in terms of poverty, in terms of growth rate, and we work in areas that are very depressed at the Andes. So we have to face that situation. And many times, the state is absent in supporting industry, but we have to deal with that. In addition to that, it's important to mention that most of the important players in the mining industry are already based in Peru. A few years ago, and we remember those times when there were only a couple of international companies working in Peru. Today, we have people from the U.S., Canada, Switzerland, Japan, Mexico, China, South Africa. We have people from the U.K., from Brazil. Peru is, today, a country where we have all the important players of the world, and that makes it more attractive for investment. And when we speak about investment, it is important also to mention that it's not only foreign investment. In Peru of 100% of investment, 80% is private investment and 20% is public state investment. Of the 80% of private investment, 80% is national investment, Peruvian investment, and 20% is foreign investment, which is very important, brings new technology, new processes, but it is the Peruvian investment, the micro, the mini companies, the medium-sized companies that are facing and that are essentially leading the investment in Peru. You say it in English, "Put your money where your mouth is". Well, this is what the Peruvians are doing and Peruvians continue to have confidence in our country, and that's the reason why they are leading -- we are leading the divestment in our country. With that, I would like to leave Victor to give us an overview of the strategy.

In the second part, we are going to present our strategy and also to link a different aspect of our company, our operations, our projects, the key important aspect of sustainability as well. Here is the first statement. Buenaventura is the Peruvian mining powerhouse because 100% of our assets are located in Peru. As was mentioned, a very well recognized mining jurisdiction. We have over 67 years of experience doing business in Peru. And we have a presence in 8 different regions of our country. We have a diversified portfolio. We have copper, zinc, lead, gold and silver assets and always -- and as well, we are a partner of choice because we have 2 significant JVs, one of them with Freeport-McMoRan and Sumitomo for Cerro Verde, and Cerro Verde is, right now, the largest Peruvian copper producer. And we have also a second JV with Newmont and also with Sumitomo for Yanacocha, which is the biggest Peruvian gold producer. On the right part of this slide, you can see the presence in terms of our projects, our JVs and our operations. In this slide, we are trying to summarize our unparalleled track record. If you see more details, you can see 3 different avenues for growth. The first one is through our organic growth: Uchucchacua, Orcopampa and recently Tambomayo are 3 different example of this organic growth. The second avenue for growth has been developed through the development of JVs. Our investment is in El Brocal. After that, in the '90s, our investment in Yanacocha and Cerro Verde and always -- and as well, our investment in La Zanja and Coimolache are examples of this second avenue through JVs. And clearly, a third avenue, it's vertical integration. Our investment in Rio Seco chemical plant, our investment in the hydroelectric plant of Huanza are our third avenue. In the following slides, you can see that we are going to maintain these 3 different avenues open for create value for our shareholders. Here, in this slide, we are trying to present Buenaventura at a glance. On the left, you can see the low Buenaventura. And clearly, in the -- and the upper part, our portfolio of operations, the different assets that are part of our portfolio: gold, silver and base metals. And in the lower part our portfolio of projects. And clearly, you can see the different base metal projects. Clearly, also, there is a key message here. We are evolving. Right now, our EBITDA, if you see on the right part, in 2019, our EBITDA is 0.5% is represented by base metal and the second half by precious metals. But if you see in the long term, you can see a significant presence of base metal because as a company, we are developing -- as you can see in the following slide, we are developing a strategy in order to gain predictability in terms of our outcomes. Also, let me use the capital B. You can see the 2 parts, the portfolio of operations, the portfolio of projects, but in a vertical part, 2 key components, sustainability and our financial results. Here in this slide, it's a different way to reinforce our strategy. We have defined this Tier 4 system. Clearly, in the horizontal part, a key component of any mining company, explorations. The exploration is a key component of our strategy. And in that case, expressed in terms of life of mine. And we have internally defined this threshold in terms of 10 years. Assets with a longer life of mine is a Tier 1 asset. And the second component of this strategy is to define profitability. You can see in the vertical part of this graph, we have defined as well a threshold, in this case, $100 million of annual EBITDA. And in that way, we have created these 4 different quadrants. That I said, we are trying to explain our strategy using this graph. Clearly, we are evolving as a company. We are developing many programs in order to become a company based on Tier 1 assets. The investment in El Brocal and Uchucchacua, for example, 2 existing assets, we are working in exploration programs. In a few minutes, Juan Carlos Ortiz will explain these enhanced methodology for explorations. But we are also improving its efficiency through this De-Bottlenecking Program. And also, in terms of our projects, you can see in this first quadrant, San Gabriel and Trapiche in dotted line. We are developing enhanced methodology in order to develop these projects, in order to gain -- in order that our capital allocation generate value for our shareholders. And definitely, Rio -- Cerro Verde. It's a Tier 1 for us is like a benchmark. Also following this slide, you can see in Tier 2, 2 different assets, Tambomayo and Coimolache. In the case of Tambomayo, we are working through an exploration program in order to extend the visibility of its life of mine. And in the case of Coimolache, right now, it's a gold producer in yellow. But these orange border is because in the future, it will become a copper mine. We are developing as well this project following these enhanced methodology that I expressed. And in Tier 3, we have Yanacocha. Again, it's the same in yellow because it's a gold producer, and we are working closely with new one in order to develop this project. Probably in the Q&A session, we can explain with more details our strategy regarding Yanacocha. And in Tier 4, we have 3 different assets: La Zanja as well as Coimolache and Yanacocha is -- right now is a gold producer, but it will become a copper producer. So in summary, you can see our strategy to become a Tier 1 asset. For that reason, we have a De-Bottlenecking Program. We have an exploration program, an enhanced exploration program. We have also an enhanced methodology in order to develop our projects. We have hired Terry Owen, which is an expert in this regard. And behind this -- all this program in order to derisk -- and this is where -- this investment, we have a very strong sustainability program that Alejandro Hermoza will explain in a few minutes. Just to summarize. This is -- we are presenting here our outlook for the coming 3 years. In this case, for our gold assets. Tambomayo, you can see, we expect to maintain a steady level of production. In Orcopampa, in this case, we are analyzing the most conservative scenario, which means that during 2021 and 2022, we will stop production and put all our effort in exploration in order that to restart production in 2023. That's, as I said, our more conservative scenario right now. Coimolache, we -- you can see a slight downtrend because, as I said, in Coimolache, we have to create a bridge between the gold mine to the copper mine. In La Zanja as well, we have a soft landing because as well as in Coimolache, we have to create this bridge. And San Gabriel is our new project. We intend to obtain all the permits during 2020 in order to start construction in 2021 and 2022. In the future, San Gabriel will be a mine with this level of production in the order of 120,000 to 150,000 ounces of gold per year. In terms of our silver assets, in Uchucchacua, we see a positive trend because we are integrating Uchucchacua with Yumpaq. Also, in the following slides, Juan Carlos Ortiz will explain with more detail this integration. And in Julcani, we see a steady level of production. In the case of Brocal. In Brocal, as you know, we have an open pit. We have also an underground mine. In the underground mine that produced mainly copper. We see a positive trend and increase also in terms of gold products. In the case of the open pit, we see a gradual depletion of all the zinc resources. In the long term, El Brocal could be a copper mine. With that, we -- Alejandro Hermoza will explain the sustainability that is, as I said, a key component of our strategy.

Thank you, Victor. Just one quick note to let you know that our presentation -- the whole presentation it's already on our website. So well, as Victor mentioned, we want, on this occasion, to share our view on sustainability, which, in Buenaventura, we have developed our sustainability model sustained on 3 dimensions. But before that, I want to go quickly on my background. I'm an engineer as well, and I took on the human resources management of Buenaventura over 16 years ago. Those days, we started to see that the social issues were gaining in complexity and had to do a lot on what we were doing also in terms of the human management. You have to take into account -- I'll show you some figures that over 60% of our workforce belongs from the regions in which we operate. So there was a need to have an integrated approach. Also, in these years, the environmental issue, growth in importance, and we're also realizing Buenaventura that it wasn't only about having sound technical management on the environmental side, but we had to assure that we were getting confidence from the population that they would trust on what we were doing in our operations. And that's how we would ended up modeling our sustainability approach, integrating these 3 very important aspects in the mining sector. It was about gaining trust and, of course, derisking the operations. A quick snapshot on some figures on our sustainability approach and something that Roque mentioned before, I want you to pay attention. We have most of our operations across the Peruvian territory, but more specifically on the Andean region in which Roque mentioned, we have the lowest human developed indexes. What it's got to do with us? Has it means that we have to develop our projects, build our mines in regions where we have large deficits in terms of infrastructure, in local services, in job opportunities. And this means that we have to face a situation where you are going to find population with high expectations of what they can get from an investment that came -- there are not that many investments well above 3,500 meters above sea level. And that has to do, then again, with the fact of the challenge of running efficient operations, safe operations, but well aligned with the sustainability goals that the population on the regions we have placed. And that's why it's important for us as well to be aligned with the sustainability development goal what they are called the SDGs that the United Nations have defined. And this is important because our government as well, the Peruvian Government, has committed to these SDGs. So what we want to do is have our sustainability approach aligned to the governmental efforts, national, regional government and maximize the impact of our activity. Some -- quickly some figures. Just take note, we are over 12,000 people working in Buenaventura, and I mentioned that over 60% of them come from the regions in we operate. And about 40% from the local communities, the local villages, in which we operate. That's an important factor to take into account into our management. And issues like water, which not too far ago was one of the main root causes for conflicts among mining companies and populations. We want people to feel that water must be something that can really unite efforts and allow to build partnerships. We're going to go over some of these numbers later on the presentation. So from our vision, we have clear that we have to have operations that can produce mineral resources, but creating value to everyone involved. And it's -- and for that, taking into account that it's not only about development goals or sustainable goals, but about having a good balance among the economic factors, the social factors and the environmental factors. And that's why we're focused on our sustainability model in building synergies and opportunities. But among what? What among -- what the operation needs to be sustainable and efficient and, of course, building social engagement and sustainable development. And we want to -- I want to come to your attention on one principle for Buenaventura, very important. We don't want -- we talk about social -- shared social responsibility, which really means is that on our focus on our sustainability approach, we want everybody to engage with roles, with responsibilities and duties, not only the company, solving problems, but authorities, communities, population and the company as well. And one of the challenges that many mining companies or most of the mining companies is how to assess what they're doing in terms of sustainability. We had hard times, most of us, trying to measure and see how efficient are we moving forward in this aspect. In Buenaventura, we have put a lot of effort in development, developing our own sustainability assessment tool, which is based on the monitor and measure of 3 variables, 3 of them that has to do with external factors, has to do in measuring what are the gaps in terms of -- in social infrastructure, basic services; what are the quality of local government that the different villages population have; and one very important, in countries like Peru, are very important, the social basement, the social institutions, community. And we want to take a deep look in terms of their governments -- governance and their institutionality. So those are factors that we want to follow closely. And on the other side, of course, 3 factors that have to do more with what us as a company can do, has to do with how well we design and develop our engagement programs, how do we deal with the negotiation needs that we have all the times, for instance, land access. By this model, we can design more effectively our action plans. Just quickly an example because we're not going to be showing all what we have. This is the project San Gabriel that already Victor mentioned. It's a new project. It has not been constructed yet. So it's a population which has not been related to the mining activity, yet, the region has, but not the towns. And what we can see here, the gaps we can measure in terms of the infrastructure, in terms of the strength of the local governments. And what we're working on as well on the governance of the social local institution. From this lecture, we have an action plan right now, pretty much focused on the prior consultation. Some of you might not know, but Peru is one of the signatory countries of the Convention 169 from the ILO, the International Labor Organization, which requires authorities to conduct consultations about decision or giving authorization, for instance, in this case, to Buenaventura, to build, to construct the mine. So in order to get in this consultation support from population, we're very much now engaging this action plan, which we believe will help us or will help government to conduct this consultation. So I was talking about and Roque mentioned about all the challenges of working on these regions with a large deficits. That has to do with the larger hand that many of these places have. We have had to take a decision and focus on 4 specific strategic objectives that we showed here. Environment, water and innovation, which has to do in building a sound operations in terms of their environmental management, but also focusing on how to generate benefits in this aspect for the population. The second one, people. I mentioned before that one of the first responsibilities we face when we go and put a mine in place, it's generating job opportunities, but we have also responsibility to have these operations to run efficiently and safe. So we have to integrate the efforts with building local capacities and having sound operations. The third and the fourth one has to do also with expectations about how we build a mine. And we have to make sure also that bringing a mine into operation approach or run operation also generates conditions for local competitiveness and also diversification, local productivity. I'm going to show quick examples on what we are doing in this aspect. In term of waters, okay, of course, it's not also -- it's not only building the infrastructure we need for running the operation, but in the -- also generating assets for the populations. It's not only, I was saying, about assets, reservoirs or single-family unit reservoirs that can attend what the operation needs, but that could also be an asset for the population. But not only building assets, also building governance around the environmental issues around water. That's why we're also very much involved in watershed management. And Buenaventura is one of the leading companies in promoting this participative monitoring committees. And innovation also an important aspect for us. In terms of safety, local capacities, I was saying, we need to generate job opportunities. But for that, and understanding where we have in our minds, we put a lot of effort in building local capacities. During the past years, we have been involved even into promoting and participating in improving even school allocation in the early years, and not only training for the job situation. You can later review on some of the figures we have here that show the good results we've been reaching with the population. And I was saying, this has to do as well with having safe operations. That's why we are also very focused in training people, having capacities to have safe operations and efficient operations that can result in improvement on our numbers on -- in safety issues. And the third strategic objective is to be a partner for local competitiveness. And I want to emphasize here that it's not about what the mine can do, but we put a lot of effort in building partnerships, in working together with authorities, local authorities, regional authorities, national authorities. And that's how we have been able to promote important public investment as well as private investment across all of our operations. Again, on the presentation, you can see in detail many other things in which we are involved with. And I just want to mention the importance of one piece of the legislation in Peru, which allow us on the -- from the past years to get involved in investment through taxes. In fact, what you do is bring in advance some of the taxes the company is going to pay and convert them into local investment along with the -- in cooperation with the authorities. That has allowed us to put a lot of effort in reducing many of the infrastructure gaps that the regions and the -- where we operate. And last but not less important, we don't want -- when we come to a region, we don't want to -- everybody in town to expect to get a job on a mine or to sell or give any service to the mine. We need for them to improve the competitiveness on their own traditional economic activity. That's why Buenaventura for many years now, we have developed a program, which is called the PRA Buenaventura, PRA comes from poverty, relief and alleviation, which, as a matter of fact, we took the methodology from an important program that the USAID brought to Peru over 15 years ago, and we found it to be a sound methodology to improve competitiveness on local producers. Some numbers here of what we have achieved in terms of incremental sales on local producers. This is on the last period of the program in terms of job created in terms of articulated producers. So to end and summarize. Sustainability for Buenaventura is about building trust on 3 dimensions: on the environmental management, on the social dimension and the way how we manage our workforce, about building trust and reducing risk on the end to have sound, efficient and safe operations. With that, I'll pass on to -- thank you -- Juan Carlos.

Good evening. Well, I'm going to be in charge of presenting the progress of the strategy that we have been deployed the last 3 years to move all our assets into the Tier 1 category or consolidating the ones that are already there. This part, trust is very important. It's important to have as operators team -- a strong team lead by Alejandro in order to work back-to-back, in order to build different relationship with the community because it's a key important aspect of deploying this strategy of growing in the long term. The strategic distribution of our operations, as Alejandro mentioned before, it's mainly on the mountains. And for the expansion of the drill operation or to bring in new operations into our portfolio, we need to develop this trust. There's a key tool for our strategy to bring more reserves in the long-term of bringing new projects into our portfolio. For the evolution of this strategy in the last year, 2019, 2020, we can see here the comparison of the gold, silver, zinc production, copper production between 2019, 2020. We see a stable production coming from our operations, a slight reduction coming in the case of gold from the reduction in Yanacocha gold production. And in regards of cost applicable to sales, we can see pretty much the same constant evolution between 2019 and 2020. The important role that plays with the De-Bottlenecking Program is showing here that we can control the cost based on the commodity -- unit of a commodity sale. This is important for gold and silver, and we see later on the presentation of each particular asset that we are developing. And you can see also this is a potential decrease in the costs that we are working hard now in the case of El Brocal. We will develop that idea later on. That's also part of the De-Bottlenecking Program in order to mine high-grade areas in the short-term in the underground mine. Bringing back to our strategy. We have the fourth quadrant here and the operation devalued in different tiers. The ones in green are the one that developed a steady production according to our plans in 2019. And the ones that I highlighted in red are the ones that face difficulties in 2019. We will develop that later on. And the strategy here, the one the projects that I'm going to show here is how these assets are being moving in the last year and where is planned in 2020 to start moving these assets for a longer view, longer-term and increasing every day each one of them. From our gold portfolio, we have the 5 mines that we operate. Tambomayo was -- 2018 was a steady production, very good production coming as expected. And also, we report a significant reduction in operating costs on a dollar per ton basis. That's part of the program that we launched is De-Bottlenecking for the case of Tambomayo. The increasing life of mine is key for Tambomayo. We have been working in the footprint that we have around the processing plant. But now we are moving a little bit step further up in the north. That's a project, Los Diques. That's about 2 kilometers to the north of the processing plant. We are working in that area right now. And 2 very important areas, Mayra and Gaby that are located pretty much 7 kilometers from the processing plant, where, as Alejandro explained, building relationship with the communities in that area to get access and to continue the exploration program that we started in 2018. That will be -- we expect high-grade veins bringing more ore into our existing facilities. In the case of Orcopampa, as Victor explained, we are facing some difficulties by the depletion of the high-grade areas that we already have in the underground mine. We are keeping the pace of exploration. We believe it's a really good area for high-grade veins that it was being in the last 50 years. We are putting a lot of focus on exploration to extend the life of mine of Orcopampa well. In La Zanja, and I would say in the last 3 assets that were mentioned here in this slide, La Zanja, Coimolache and Yanacocha, the 3 of them are in the transition. They are in transition from gold into copper. The proper nature of these deposits is that they have gold in the upper part and underneath that they have copper. So the -- in La Zanja, we are depleting the reserves of gold as expected, and we are progressing in the exploration of 2 targets in the same footprint that we have right now with the roads and all the facilities. This is Emperatriz Central and Emperatriz North. In the case of Coimolache, it's the same. We are progressing with a life of mine planned for the gold reserves. We are connecting these 2 programs, the gold production and the copper production, to fit in the same area. Key pointing here, we're progressing well and getting control over the footprint of the larger projects for copper. We are developing the engineering, deeper engineering for the sulfide transition. And we are moving with expected production in gold in the coming years. Going -- this is going to be a project, a new asset for Coimolache, copper, long view and a higher EBITDA, over $100 million per year. In the case of Yanacocha, they are also evolving. They are -- they delivered Quecher Main, the new open pit, last year by the end of the year. And they are developing deep engineering, moving into feasibility and detail engineering for a transition to copper. In the case of our silver portfolio, we have Uchucchacua. It faced some difficulties at the beginning of the year with a strike that lasted 21 days. We recovered back in the next quarter from that reduced production. And also, there was a change in the strategy or a change in the market that pushed us to change the strategy in the short term. We will develop that later on. But basically, we were mining the upper areas of the mine, where we have higher contents of zinc and lead. And along the year 2019, the zinc market changed dramatically. The treatment charge went really high up, and the margins coming from this ore were reduced along the year. That's the reason we decided to get back in 2020 to the high silver content areas underground. Something important as well as extending, as I mentioned, the life of mine of our assets is the integration of the Yumpaq. Yumpaq is the fruit of exploration in the last 7 years in the nearby area of Uchucchacua. It's about 5 kilometers to the east of the processing plant. It's a very high-grade ore body. It's above 20 ounces of silver per ton, very high grade. And we are planning to launch the integration of this ore body to the facility that we have in Uchucchacua. So we're starting the second half of this year, and we expect to deliver that integration by the end of 2021. In the case of Julcani, well, steady production, and we are planning to replenish our reserve as we have been doing for the last 65 years. In the case of our base metal operations, Cerro Verde, for sure, a Tier 1 operation. It's steady production. We're running at about 37,000 tons per day at the processing plant. It is a very, very high production, almost 10% of our nameplate capacity of the 2 processing plants. And they are planning for 2020 to go even beyond that number, above that number, in order to compensate to offset the lower grade that they are planning to mine -- to process this year. In the case of El Brocal, we have faced some difficulties in the open pit in the last year, particularly in the north phase. We have some stability on the slope. We control that by the end of the year. In November, we controlled that landslide and we resumed continuous operations since that time. Again, we have here, in the open pit, the impact of the change in the market. It's particularly the zinc, the driven charge, as I mentioned before, were moving up along the year, and it reduced the EBITDA coming from the open pit production. What's the focus of 2020? In this case, moving into the strategy, again, of extending the life of mine, of our target of increasing the EBITDA, it's to gain access and start and continue mining because we have been mining right now the high-grade areas that we have underground. Pillars that were left by the mining method in the past, and we are doing a recovery -- a secondary recovery of the pillars that increase the recovery from 45% of the ore at the beginning up to 65% of the ore with this technique. There are pillars of above 3%, 4% copper that will help a lot in the -- increasing the EBITDA of El Brocal. As I mentioned, the idea -- the general idea, the strategy is to increase the value of our assets by extending the life of mine and by increasing the value of each one, increasing the EBITDA, the annual EBITDA that each one is reporting. In the case of increasing the EBITDA, the De-Bottlenecking Program is delivering all the expected results. You have here a list of the main activities of the main project that were delivered along 2019, with a total amount of about $45 million EBITDA, additional EBITDA on a yearly basis. The program is still yielding some results. We expect to have a program for $40 million of additional EBITDA in 2020. You can see now we are focusing on 3 of our assets: Tambomayo, Uchucchacua and El Brocal. And the main assets or the main activities that will give the value will be the continuous improvement in the metallurgical process in Tambomayo. We have increase in recoveries, reducing operating costs and increasing -- or improving the quality of our products, the quality of the concentrate that we produce. That's one key point for our strategy in this year, 2020. And in the case of El Brocal, it's recovering the high-grade pillars of copper in the underground mine. So to put a little bit more color on what we're doing, I will be showing some example of why we did as part of the De-Bottlenecking Program in the last 2 years that was in 2018, '19 and part of the plan in 2020. In this particular case, it's exploration. Exploration is key for us for extending the life of mine of our assets. And in that regard, we were looking for a new way to explore our narrow base that have in Tambomayo, Uchucchacua and other mines. The -- in the yellow area, you can see where we did with -- in 2017, in which we drive tunnels along the veins. You see the tunnels running around this yellow structure. And you probably, as an example, you can drive 500 meters along the strike of the vein and maybe you find a sweet spot of 200-meter long or 250-meter long. In the new approach that we deployed since last year, we are doing first an infill drilling campaign with drill holes. And after we detect where is the area of the sweet spot, we go along with the vein infrastructure with tunnels and the sublevels only in that particular area. So we are saving meters of tunneling. That's very costly. And also we're saving time because it's faster to do a drill hole than driving a tunnel. So as you see the example, below the yellow area, you can see that, for example, in 2017, we can add something about 16 million ounces of silver to the -- our book of reserves in Uchucchacua case at a cost of about $1 per each additional ounce of silver. In the case of the right, we -- you can see that in 2019, we identified around 26 million ounces of silver, additional ounces of silver at the cost of $0.20 per ounces. So we are doing it faster, and we are doing it cheaper. So that's a key point to reinforce our strategy to extending the life of mine of our assets, building a longer life, investing money in exploration, that's key part of the DAA (sic) [ DNA ] of Buenaventura. Another case for optimization, that's for increasing the value of our assets, our existing assets in the particular case, Uchucchacua. We were -- we completed the deepening of the shaft, the Luz shaft for Uchucchacua mine. You see there in the green areas. These green areas -- these green blocks are our reserve, our high silver-grade reserve in the lower part of the mine. And now we completed the deepening of the shaft, 140 meters deeper, to get access to that area with a significant reduction in this number of trucks that we used to deliver the ore into the processing plant. So that has a double impact. We can access that reserve faster and in a steady way. Just taking advantage of this slide, the area that we have mined or put focus from 2018 was the upper part because we were deepening and working on the shaft in the lower part. And we put a lot of stress mining that area with high zinc and lead content. As I mentioned before, the market changed along the year 2019 and the margin generated by these ores were not expected, basically with the change of commercial terms. This is one exciting project for us. This is the Yumpaq new area extension. It was explored before as a satellite operation. But as you can see there, this pretty much, we suspect there is a connection or there is a integration of these 2 structures. I didn't -- I'm not sure with that -- all the base that we have on the Uchucchacua side because it will be kind of messy to see all these structures and the tunnel as well. But you can see there is an alignment in between. So with the exploration that we did in 2018 and 2019, we can confirm the reserve in Yumpaq as high-grade vein, and we are planning now the integration with our current facilities. It's going to be around 2.5 kilometers between both ends. And as you can see there, we will start from both sides. We will start from Uchucchacua mine. That's about 700, 800 meters. And we connect -- we start also from the other side from Yumpaq. It's about 1.7 kilometers. And we connect both sides with rises in order to drop the ore into the existing Uchucchacua facilities, and then use the shaft to bring it up to the processing plant. That's a very important project for us. As I mentioned before, Yumpaq mine or Yumpaq ore body is about 20 ounces per ton. It's a very high-grade ore body. And we are always positive as miners and geologists that there will be some opportunity to find new ore also in between. That's another case in Tambomayo. Again, in order to move our assets from wherever they are into Tier 1 quadrant, it's increasing the value of each one, increasing the EBITDA by reducing the operating cost. This is an example in which we bring a lot of consultant in order to know what is the -- where are the opportunities to reduce the operating costs of this area. In the left side, you can see what was the original design of Tambomayo mine. In that case, by geomechanics at the early stage of knowledge of the ore body at the vein, we decided to go by steps of 12-meter each. So every 12-meter, we need to repeat all the infrastructure, the tunneling, rises, all the service every 12 meters. We retained the services' experts in geomechanics. They analyze our mine, and they bring us the opportunity to go up to 25 meters. So right now, you see here on the right side, you see that the current mining in Tambomayo, it's every 25 meters. So if you can draw a line, we are saving 1 sub-level in between these blocks. So that's the reason we are now with a new standard of almost 120 tons ore for every meter of tunnel that we need to drive underground. So it's a significant reduction in costs from 45 tons of ore for every meter that we did in the past. Something similar to that of Tambomayo is the case of Brocal. In Brocal, we have a big ore body. It's a [indiscernible], almost 20-, 25-meter thick. Originally, the mining method selected for this ore body was room and pillars. It's skin that you can see here on the right side, and you see that for an in situ block, we can mine the white areas, lifting these pillars to support the groove. That was some 15 years ago, and we can achieve 45% recovery from that ore body. Right now, we are -- where we call it pillar robbing, I don't know if that's proper translation in English, but actually, we are recovering part of the pillars that were left in the past. And after we recover that, we backfill that void in order to maintain the ground control. So we can achieve right now over 65% recovery of the ore body. The idea of that is not only to grow the EBITDA, because, as you see here on the left side, this is the whole ore body in green and the gel -- the red and orange spots are the high grade. It's a very high-grade ore body. You can see, this is the cutoff, only showing the orange and green, over 5% copper. And in that area, there are some pillar left. So we have 100% access to this point. We can mine it out, but we need to develop the proper technique, and with geomechanics, how to monitor that for underground and at the surface. So right now, we are deploying that. We are using now the technique for backfilling with the same ways that we generate along the tunnel we are driving underground for developing. And in the future, by the end of the year, early next year, we will start using hydraulic backfill. And again, hydraulic backfill will be an additional incremental value because we are reducing the amount of tailing we've sent to the tailing dam. So the pace at which we are putting CapEx on our tailing dams will be reduced at the same rate that we are putting tailings back underground. So it will be an integration of both sides, also for sustainability, reducing our footprint in the long term as well as reducing the CapEx for tailings in the surface. From the other aspect, we'd see a previous slide to explain exactly what we are doing in order to improve the profitabilities of our assets to increase the EBITDA on an yearly basis. And now we'd like to stress on the other dimension. The second dimension to increase the life of mine of our assets. I put 3 examples here. Tambomayo in the upper right -- in the upper left with that -- with a significant increase in the number of meters drilled with them and drilled for exploration from 2016 and '17, that was construction time, and 50 tons -- 50,000 meters per year since 2018, keeping that pace for 2020. In the case of Orcopampa, we did a peak of exploration in 2018 and resumed back to the level of exploration that we have in 2016 and '17. Even if the production is lower right now, we are putting the same effort and the same stress on exploration that we did in the last 2 years, 2016, '17. In the case of Uchucchacua, I mentioned before, there was a big emphasis in 2018 to explore the Yumpaq ore body. We are bringing these results -- this good result of exploration into production and it will be, as planned, in the processing plant by 2022. So that's the reason we have a peak in 2018. And we continue, of course, with the same pace of exploration in a more efficient way. So we are getting more tonnage out of the same meters at the cheaper cost. As a summary of our reserve, we have the gold, silver and copper portfolio in 3 sections. In the first half of H1 -- in the first half, you see what's the reserve on a 100% Buenaventura basis. And on the second half, you can see that Buenaventura plus our subsidiaries or our participation, including the participation that we have. From the gold portfolio, we -- our operations keep pretty much the same. But one important aspect that Victor will develop in a minute, it's the report of 1.7 million ounces of gold additional reserve, front reserve, from the San Gabriel project as part of the strategy of bringing a new asset, Tier 1, into our portfolio. The increase in a dual reserve is also basically the contribution of San Gabriel and steady replacement or replenishment of reserve in the other assets. You have more details of that in the appendix. In the case of silver, we have a steady increase in reserve on Buenaventura and attributable reserve as well. And in the case of copper, another good news also by exploration is the Trapiche project. The Trapiche project was included or -- concluded a positive refeasibility study and is adding almost 1.4 million tons of fine copper into our books of reserves in addition to the reserve that we already have in El Brocal and in Cerro Verde. So I would like to stress here that the 2 axis are working together in order to move or to consolidate our operation into Tier 1 category. The exploration to extend the life of mine, moving at a faster pace -- cheaper and at a faster pace; and number two, by the De-Bottlenecking Program, increasing the yearly EBITDA of each one of our assets to move to the above the threshold of $100 million EBITDA per year.

Thank you, Carlos Ortiz. But before we take home the driver of value of our projects, let me use again in this upper right part the capital B of Buenaventura. As I said, we have a portfolio of operations. Through this -- in this portfolio, we are working in order to improve our exploration programs, in order to improve the efficiency through the De-Bottlenecking Program, and specifically, in the -- in our portfolio for growth, we are as -- in the left part, you can see the allocation of our projects, and again, we have a presence in 8 different regions. The sustainability program is a key component of this strategy. And on the right part, you can see also the development level achieved at the end of 2019. Again, you see Coimolache, Yanacocha and Emperatriz, which is part of La Zanja, because they are 3 different assets that are evolving from gold to copper. And in the lower part, let me share with you our key component -- our key definition that was discussed in Buenaventura in terms of how to improve our capital allocation. We are developing our project with these -- following these criterias of IRR higher than 15% and life of mine longer than 10 years and annual EBITDA higher than $100 million and the production costs in the first or second quartile. Moving on to see in more details these projects. San Gabriel is the most advanced project. On the left part, you can see an updated geological section of this ore body. On the right, as I said, we have hired Terry Owen. With him, we have developed this strategy to break down the project in 12 different components. Clearly, you see 2 different red circles. The first circle, it's when we achieved the scoping level. The second circle is we have achieved a fully prefeasibility stage. And during 2020, in this year, we expect to achieve a fully feasibility stage. For that reason and at the end of the year, we have declared 1.7 million ounces of gold. Also, as was mentioned by Alex, during this year, 2020, we expect to achieve all the permits in order to start construction in 2021. It's a cyanidation process and a processing plant with a dimension of 3,000 metric tons per day. We intend to produce in the range of 120,000 to 150,000 ounces of gold with a CapEx -- initial CapEx in the order of $370 million to $430 million. Following the same strategy, the same enhanced methodology, this is another project, greenfield project, in this case, a copper project located in the southern part of Peru as well. On the left part -- in the upper part of this slide, you can see the pilot plant that we are building on-site in order to improve our data -- technical data in order to develop the feasibility stage. On the right, in terms of maturity, you also see that 12 different components, the red circle. Clearly, we have achieved at the end of 2019 a prefeasibility stage. For that reason, we have declared reserves in the order 1.4 million tons of copper. And during 2020, through that data obtained in this pilot plant, we expect to obtain a full feasibility level. We have hired a very well-known consultant company based in Arizona, M3, for the development of this project. And in the case of Rio Seco. Rio Seco, it's quite different. It's a chemical plant. It's part of this concept of vertical integration that was explained at the beginning of this presentation. On the upper part, you can see a photo of the pilot plant in place. We have hired for this project, Hatch, the Canadian branch, in order to validate the metallurgical process and also Samuel Engineering in order to obtain the feasibility stage. On the right part of -- in the upper part, you can see the maturity of this project clearly as well. We have obtained a prefeasibility level. And during 2020, in this year, we expect to achieve feasibility level. This is a key significant project for us because through this project we intend to unlock a significant value for our copper portfolio. And obviously, in this case, also, we are, as was mentioned, thus, in Buenaventura, we have 3 different objectives for growth: organic growth, JVs and vertical integration. Clearly, in this case, in Rio Seco, one option was also to develop a JV. And finally, Coimolache. Coimolache, it's, as was mentioned, a gold mine, but in the future, will become a copper producer. In the -- you can see this is a photo of -- on the -- in this part, you can see the current footprint of our oxide deposits, which is nearby the operation of gold fields, but we are still developing a stand-alone project. We have achieved a scoping level. And at the end of this year, we expect to achieve the prefeasibility level. And the key -- let me share with you, this is a key component part of this project. We have, as was mentioned by Alex, based on our standard experience in dealing with the rural communities, we have controlled a significant piece of land for the tailing -- for tailings dam. And we are developing a dry stacking technology for this purpose. And obviously, we can generate a significant value for Buenaventura. With that, the following topic is financials, and Leandro Garcia, our CFO, will be in charge of that.

Thank you, Victor. Good afternoon to all. Thank you for coming and sharing your time with us. Although our financial results were not as good as we planned last year, and we show in this time in -- March 2018 because of all the operational issues that we've had to face during 2018 and was -- were explained by Juan Carlos and also the trade war problems with our treatment charges, especially for our zinc concentrate, we think that we have -- we continue having a strong financial position to develop our projects, our very strong pipeline of projects. Our EBITDA coming from direct operations, we expect increase in this EBITDA based on the best performance of our own mines, Uchucchacua and Brocal. In the case of our EBITDA, including associates, we are foreseeing a decrease in this EBITDA basically for the decrease in production in Yanacocha. Our CapEx, in this year, we are not planning to construct any of our projects. We'll continue with the studies, and we will maintain the CapEx in the same level of 2019. Our free cash flow, we are going to recover our levels of free cash flow. And the explanation of what happened in 2018, basically, it's the amortization we have made from -- in our financial facility around $70 million, the investment in our De-Bottlenecking Program and also in our greenfield projects. This budget or all our forecast has been made with prices of gold in $1,500; silver in $70 per ounce; copper in $6,000; zinc in $2,200 per ton; and lead in $1,950 per ton. Following in this -- in the following page, we here can appreciate the evolution of our ratio -- net debt-EBITDA ratio. We finished 2019 with a little higher than 2x, but we expect this range in -- at the end of 2020. For this year, we are already working on, and we will refinance our main debt in Buenaventura. We have a syndicate of $275 million and taking advantage of our -- of the current situation, we will try to -- we will expanding -- we will expand the maturity to 5 years, at least, and we will lower the interest rate. In November, we have the payment of the last quota of the Huanza financial -- the leasing, the operational leasing. So that payment we will transform in -- we will issue a bond around 10 years. With those -- with both operations, the average debt maturity will come from 1.7 that is -- as is today to 4.8 years. This will be here.

Thank you. That is the last slide. As a summary, just to reinforce our strategy to explain our -- to reinforce the message. As a company, we have a long-term business plan, a profitable business plan. And using this concept of these 4 different quadrants, we are working in our existing assets in order to move all of them to the Tier 1 position through the exploration programs and through the De-Bottlenecking Program. We are also working in order to develop our new mines following this concept to put this in the first quadrant. And again, we are working closely with our, in this case, with Newmont, in order to develop Yanacocha and to become Yanacocha as well a Tier 1 asset. And as -- also, as was mentioned, Buenaventura is by far the biggest Peruvian company in Peru. We have a very well-established sustainability program that derisks this business plan. Thank you for your attention. We can start the Q&A part of this presentation.

Has the recent increase in the price of gold affect your plan?

In the short term, probably we could take advantage in the case of La Zanja. For example, in the case of Coimolache, there are areas that with the current gold price could be profitable. But you can -- you'd like to add something, Juan Carlos, regarding that, that in the current gold price, we could take advantage and take -- increase our...

Yes. We have a part of our reserve already being mined. But we have also a portion of the resources that are consistent way with higher gold price. So we can access our open pits to that extra layer of ore in the boundaries right now. We're taking advantage of the high gold price and put that ore into our parts. That's short-term for...

Another way to say -- to explain is that in the long term for our ore reserve calculation, we have used USD 1,300 per ounce of gold. So probably, they are areas that -- analyzing this area with a higher price, we can create a profitable business case for some areas.

At Coimolache and Yanacocha, could you please tell me what the gold production was last year? What you expect it to be this year and next year?

In the case of Coimolache, there is a slide. In -- the last year was in the range of 145,000 ounces of gold. We expect to maintain this level in the coming 3 years in Coimolache. But we have to take into account that we have to develop the sulfide project. We have to -- probably, we can slow down this production in order to create a more smooth process to the copper deposit. In the case of Yanacocha, the last year was in the order of 515,000 ounces of gold. And for this year and the budget, it's in the order of 420,000 ounces of gold. So in the case of Yanacocha, we see clearly a downtrend situation, because as well, we will have to move to switch to copper -- to the copper part of the deposit.

The Yanacocha, is that 100% or 50%?

100%. The 2 numbers have -- are on a 100% basis.

With respect to Coimolache following on from that question, in my previous life, I recall that the copper belonged to Southern Peru and you will work in the gold. What's the relationship going to be on that one going forward?

Yes. We have a very good relationship. I don't know if Roque wants to answer it.

Yes. The agreement was that when the deposit -- the gold deposit was depleted and we get into the copper area, Southern Peru will be the operator. It's not that they own the copper and that we own the gold, no, just to be clear. We have not reached that point, but it's going to be very difficult to change the management and who leads the operation. I think we will have to get to terms with Southern and continue as a separate company, independent company to Buenaventura and to Southern to develop that copper. The fact of the matter is that it's a huge copper deposit and Regulus is a union company that is next to Coimolache, and it's promoting what they have as a resource and claiming that Coimolache is huge. Well, the union companies promote that way, and we appreciate that.

And we are also trying to explain that based on our experience in Peru, we have been able to take control of a significant piece of land for that tailing -- for our tailing deposits, which is a key component for the flotation plant for the second stage of this project. And we expect, as -- right now, we are leaving all this development of this business case.

I just wonder, going forward, whether you could give us a little bit more fulsome color on the -- or color on the resources around your properties. For example, with Coimolache, it would be great for investors to understand what -- obviously, you can't sort of project a large reserve at this stage, but just to give a color as to what the potential could be there.

Yes. Thank you. No. Thank you for the advice, [ Jon ].

Carlos De Alba with Morgan Stanley. Just a quick question on the multiple fronts in which you are working, different projects, clearly. Is it possible or is there a possibility that San Gabriel and Trapiche become JVs? Or does the company would like to keep those as part of the -- just sort of organic growth, company-specific projects? And then maybe on the financial side, could you let us know what TC/RC's assumptions are embedded in the guidance for zinc and copper, please?

Okay. Thank you, Carlos. For your first question, definitely, if you analyze San Gabriel and Trapiche, San Gabriel, it's quite similar in terms of dimension as Tambomayo. Obviously, we have to discuss this at a Board level. But clearly, we see that we can develop as an organic growth alone as part of our portfolio, 100% under control of Buenaventura. The case of Trapiche is quite different. The investment is huge in terms of -- in comparison to San Gabriel. And obviously, as I said, we have to discuss this at a Board level, but we could be open for a JV definitely. There are many Japanese entities willing to invest with us in Trapiche. Okay, the other question was TCs?

We have a long-term agreement for quantities. And we are assuming as an average for this year, zinc -- in zinc, $380; in lead, $250; and copper, around $110 or $130 per ton.

With your transformation from gold to copper, do you still find that Newmont is your best strategic partner in Yanacocha?

Yes. Yes. Definitely, it's a tough question. Obviously, it's becoming a copper asset. But we have to take in account also that surrounding the current footprint of Yanacocha, there are also many oxide deposits that could be developed if it's a big -- if we were able to generate a positive environment -- the relationships within the company and the populations around the Yanacocha. Definitely, if we develop only the sulfide project, could be a copper deposit, I can talk in terms of -- on behalf of Newmont. But definitely, in terms of oxides, in terms of gold, there are still open many opportunities if we could generate a positive environment with rural communities.

Could you comment on Freeport's, I guess, tax issues with Cerro Verde?

Yes. Probably, I can summarize the concept, and the numbers, probably Leandro Garcia could be help me in that case. In the case of Cerro Verde, as you know, from geological point of view, in the upper part, you have oxide and the leaching part -- the leachable part of the deposit. And in the -- beneath this part, you have the sulfides, the require flotation plant. According to the tax authority, the tax agreement signed with Cerro Verde only cover the oxide part of the deposit. According to Cerro Verde and also according to Buenaventura, that tax agreement cover both areas because in Peru, you have mining claims that cover an area. It's very difficult to cut and say, okay, this part, it's oxide, this part, it's sulfide. Still, right now, Cerro Verde is still producing copper cathodes, more or less 10% of the total production. So this is the original of the discussion of the dispute that according to the tax authority, our Cerro Verde's tax agreement only cover the oxide part of the deposit. So -- also, as was mentioned by Roque, Peru has signed many free trade agreement with the biggest economies in the world. So as a company, Cerro Verde, it has allowed to discuss this issue in an international arbitration, which is good, because I think that we could finally obtain a favorable result. But the numbers, I don't know.

Actually despite Cerro Verde has reached an agreement with the Peruvian IRS, the SUNAT, they have already signed a payment schedule. But their payment month-by-month under protest. And all the -- they are -- all the payment they are making, they are transferring to a discussion in international corp. The total amount of -- the amount on discussion is around $450 million, $480 million.

Yes, in total. Yes. Okay. Carlos?

I guess, continuing with Cerro Verde, what are the latest discussions in terms of dividends payout?

Yes. It's -- you see that the current market, the current market is not in favor to discuss a dividend policy. We have decided -- presently, we -- a week ago, there was a Board meeting in Phoenix where it was discussed, this international arbitration. And in terms of the dividend policy, we have decided to postpone the discussion along this year because the market price is not good enough. And -- but definitely, it is a topic that we have to solve in the coming months.

One of the topics that you had coming into this year was refinancing debt. I wondered if you could give us a little bit of detail on how that's progressing.

Yes. Thank you, [ Jon ]. It's progressing very well. We are taking advantage of the current market. And Leandro Garcia could explain with significant details of the process.

No. We have this syndicate with...

Let me put the slide, here. We are working in these 2 facilities. In this one, $275 million. We are working in order to extend the maturity and to reduce the capital costs. And this $131 million, which is related to the hydraulic plant is -- the idea is to issue a 10-year bond in...

November.

In November, yes. That's the 2 most important tranches of the total debt of the company.

Brocal was refinanced in October last year.

Okay. No more questions? Thank you -- sorry.

Question one, I didn't really expect that there was going to be strikes this last year. I was wondering if you could give some sort of sense as to what the labor situation is within Peru. And whether it's at all being affected by, say, the presence of some of the Chinese mines?

Alejandro, probably, you can explain that.

Yes. Thank you. As of now, usually, the union sector is most affected by political activity. Many of the unions, the mine unions in Peru are very well related to the national central unions. As of now, even though we have been facing some situations like in Orcopampa, which led us to do significant reductions on -- labor-wise, we were able to handle and manage this in a very peaceful way. We didn't face any situation. We have -- are still working on running more efficient operations in other places like Uchucchacua or El Brocal. But as of now, we think we're handling and managing the situation, even though, of course, refining or adjusting people, it's always a conflicted situation. But we don't expect major events like we had last year on Uchucchacua, which led us on a 20-some-day strike.

The influence of the Chinese.

Oh, I'm sorry. Well, I couldn't really make a relation with that really. What has happened, usually in Peru that it had to do most of with the political influence with national unions, central unions, and, of course, in some cases, related to a specific labor reductions or adjustment that we had to place in some operations.

No. What I was talking about was that some of the other Chinese mines had problems that, I think, affected your ability to ship.

The Chinese has problems in 1 specific operation, which is Las Bambas. They have also investment in an iron ore mine, which is Chailhuagón. They have another investment in Toromocho, another copper deposit. The problem -- the political issues of social unrest was related to 1 specific Chinese mine, which is Las Bambas.

Yes. Which affected basically the Arequipa region.

Right. Right. Is that -- has that resolved?

It hasn't been fully solved. We know there are still what they call negotiation tables among the company, the government and the local communities. So it's still a process.

Okay. Another question regarding Rio Seco. I don't understand it as well as I'd like to, and I apologize for being ignorant. But when I see arsenic and copper, I know that sets alarm bells for environmental questions. Can you give a sense as to what that project is? And whether it is getting any environmental problems from local community side?

Yes. Thank you for your question. Yes, definitely, one of our assets in this portfolio, it's El Brocal. In El Brocal, we have the underground mine, Marcapunta, which is a huge deposit in terms of copper in terms of volume, but with significant content of arsenic. Right now, Buenaventura has developed a market for this copper concentrate through 2 main traders and also directly with a facility located in Namibia. But in the long term, we prefer to develop our own strategy not depending on these 3 different options. In this regards, Rio Seco, it's a chemical process developed by Buenaventura. Buenaventura has obtained a patent here in U.S.A. and the concept is to leach at atmospheric pressure the copper concentrates in order to remove the copper -- the leaching way the copper concentrates and move and to produce copper cathodes, which is more easy to deliver to the market, and to fix the arsenic content as a scorodite. In that, I explained that we have hired Hatch, the Canadian branch, and now we have hired also Samuel Engineering. And at the end of this year, 2020, we expect to achieve a fully feasibility stage for this project.

You also worked a bit on sulfides. Has there been any movement in terms of being able to remove sulfides from the copper?

The concept is to remove the arsenic content or -- yes, or just the arsenic. And the base case scenario is using the ore coming from Marcapunta. But obviously, we can use the same concept for Coimolache that has lower content of arsenic and eventually also for Yanacocha sulfides. For that reason, we consider that this is a key project for us.

One last thing. You were noting what you'd be doing in terms of production until the next couple of years. But I mean, these projects have been in the 10-Ks from 20 years ago. I mean these are long-lived projects. I would like to have a better sense as to what kind of gold and copper production could reasonably be expected from this Yanacocha sulfides over not a 2-year period because right now, you're basically going through overburden, but what will it be 5 or 10 years out? It's not talked about. And it strikes me that it's probably that Quecher Main is a small ROE and the sulfides are likely to be rather large one and that I haven't seen the disclosure on that. Perhaps you might be able to expand on that a bit.

Yes. The main reason of -- is because we are still discussing internally with Newmont. As here, we put -- and there is another slide, we are still discussing the technological route. But we have also said that during this year, 2020, we have to solve this discussion in order to be able to take a decision for investment in 2021. At the moment, we could open and share with the market the final numbers.

Just 2 for me. You have a pretty good record in Peru in terms of social license, as you said, a preferred partner between issues at Las Bambas, your partners issues with the project to try and build in the South Tia Maria, and even Anglo American has acknowledged that they're having a couple of issues with their Quellaveco build. Could you speak to how the dynamics are changing in building these major projects for the Peruvian economy? And how it changes how you're approaching your growth initiatives? And how you can bring local insight to these foreign partners of yours as they look to invest more in the country?

Yes. Thank you for your question, but you have to take into consideration that always you see in the media, the bad experience. There are many other investments running right now in Peru without any media exposure. But I know probably, Alex could explain that 3 different cases. But in Las Bambas, the regional project was using a pipeline to move that copper concentrate. They changed the pipeline and they decided to use trucks and that generated clearly a social unrest. In the case of Tia Maria, it's quite different. It's very close to this project. There is some agricultural activity, and probably there is -- the main reason of this social unrest. And the third one was -- you mentioned the third one was related to...

Anglo American mentioned some issues with Quellaveco.

Quellaveco. Quellaveco is developing very well. There are many, as was explained by Alejandro Hermoza, in the highlands, we have a lower human development index, which means high expectations, and many times, politicians use this situation, this high expectation in order to create a political movement. But you have to know as was also explained by Alejandro, you have to have a comprehensive assessment of the situation and trying to develop a strategic plan for each one for each space. And as Buenaventura, with this 67 years of experience, clearly, as was time to explain today, we have a strategy. We have a plan.

So then on Coimolache, the exact ownership structure as it advances is a little -- I'm not totally 100% sure on, but given you're partnered with Southern Copper there, are you seeing any collateral damage from what's happened with Tia Maria in your community interactions around Coimolache?

Yes. It's very difficult to say that. We have a very good relationship with the Mexican group. We are running very well Coimolache. And we are still -- we have to still open that discussion who could be the operator of the Coimolache sulfide. But I expect that at the end, Tia Maria would be put in place, because also as was explained today, mining investment in Peru is a key component to reduce poverty. And obviously, Tia Maria is part of this effort.

And then on Yanacocha, I have a Newmont slide here saying $2 billion investment for 500,000 gold equivalent ounces through 2030 with a gold-copper split unclear. As you think about financing that project, are you in a position, if you wanted to, to stream the precious metals, to finance your share of it? Or is that something that would require Newmont's consent?

We are in early stage. That number of -- expressed by Newmont, it's based on 1 technological route, which is using the autoclave. Through the autoclave, you produce copper cathodes and you also fix the arsenic content as a scorodite. They are using this as a base case scenario. But obviously, internally, also, we are working in order to develop a stand-alone project with our profitability higher than 10% because it's part of the current footprint. Not 15%, as I expressed for our greenfield project, in this case, for Yanacocha, 10% because it's part of a footprint -- with the current footprint. But again, during this year, we expect to maintain this discussion and to take the decision, but at the end of this year. That's it. Many thanks for attending our Buenaventura Day.