Melanie Carpenter - Investor Relations, Managing Director at i-advize Corporate Communications Roque Benavides - Chief Executive Officer, Executive President, Chairman of the Board Igor Gonzalez - Director, Vice President of Operations Carlos Galvez - Vice President of Finance and Administration Raul Benavides - Vice President of Business Development

John Bridges - JPMorgan Santiago Perez Teuffer - Credit Suisse Carl Ludwin - Merrill Lynch. Tanya Jakusconek - Scotiabank Faltier Shavapo - HSBC Patrick Chidley - HSBC Hector Collantes - Credit Corp Ana Zinser - Credit Suisse Carlos De Alba - Morgan Stanley

Good morning. My name is Katie and I will be your conference operator today. At this time, I would like to welcome everyone to the Buenaventura earnings conference call. All lines have been placed on mute to prevent any background noise. After the presentation, we will conduct a question-and-answer session. The instructions to ask a question will be given at that time. Thank you for your attention. I would now like to turn the call over to Melanie Carpenter of i-advize Corporate Communications. Ma'am, please go ahead.

Thank you. Good morning, everyone. Welcome to the Compania de Minas Buenaventura first quarter 2015 earnings call on this April 30, 2015 for our recording. Today's call is for investors and analyst only. Therefore questions from the media will not be taken. Joining us from Lima are Mr. Roque Benavides, Chairman and CEO of Buenaventura, Mr. Carlos Galvez, Chief Financial Officer and Mr. Igor Gonzalez, Chief Operating Officer and other members of the company's management team. They will be discussing the results for the earnings release distributed yesterday. If you didn't receive a copy, please contact i-advize in New York at 212-406-3693 and we will send you one right away. Before we begin, I would like to mention to everyone that any forward-looking statements that are made by Buenaventura's management are subject to various conditions and may differ materially. These conditions are outlined in the company's earnings release in the disclaimer section and we ask that you please refer to that for guidance regarding this matter. And now it's my pleasure to turn the call over to Mr. Roque Benavides, Chairman and Chief Executive Officer of Buenaventura for his presentation. So please go ahead, Mr. Benavides.

Thank you. Good morning to all and thank you for attending this quarterly report of Compania de Minas Buenaventura. This first quarter of 2015 our EBITDA from direct operations was $49.3 million and including associated companies was $142.9 million. Total attributable production for the first quarter 2015, 194,000 ounces of gold and 5.6 million ounces of silver. Yanacocha's cost applicable to sales in the first quarter 2015 was $479 per ounce, a decrease of 56% when compared to $1,087 per ounce in the first quarter 2014 due to lower ore treated, higher grade and lower stripping ratio. At the Tambomayo project, construction permits are expected to be ready in the second quarter of this year. Production should begin in the second quarter of 2016 at 1,000 tons per day with a production of 110,000 to 120,000 ounces of gold and 3 million ounces of silver. At the San Gabriel Chucapaca project, construction of the ramp is expected to start in May 2015. The environmental impact study of the project construction is expected to be permitted in the third quarter of this year. At El Brocal, testing of the plant expansion was completed and production ramp up reached 16,500 tons per day level. Full production capacity of 18,000 tons per day will be reached in this quarter. Cerro Verde's plant expansion to 360,000 tons per day is in-line with schedule and budget. 70% of the expansion has been completed. Additional production from the expanded plant is scheduled for early 2016. It will become the largest concentration facility in the world. In terms of our operating revenues, in the first quarter 2015, net sales were $243 million, an 11% increase compared to the reported in the first quarter of 2014. This was explained by the lower gold, silver and copper prices despite higher silver and zinc volume sold. Royalty income increased 13%, to $9.1 million in the first quarter of 2015 due to higher revenues at Yanacocha. In terms of our production and operating costs, in the fist quarter of 2015, Buenaventura's gold production from direct operations decreased 14%, from close to 100,000 ounces in the first quarter of 2014 to 85,000 ounces in this quarter because Breapampa stopped mining last November in 2014 according to the mining plan. Gold production including associated companies increased 2% due to higher production in Yanacocha. Silver equity production from direct operations increased 38%, mainly due to higher production at Uchucchacua and El Brocal. In Orcopampa, our gold production increased 11% in this quarter due to higher treated and grade. Cost Applicable to sales in the first quarter of 2015 decreased 16% mainly explained by lower reagent costs, fuel consumption and contractors costs. Gold production guidance for 2015 is between 190,000 and 205,000 ounces of gold. At Uchucchacua, our silver production increased 49% compared to the first quarter of 2014, explained by higher ore volume treated and recovery rate. Cost applicable to sales in the first quarter of 2015 decreased 15% compared to the first quarter of 2014. Our silver production guidance for this year is between 14.5 million and 15 million ounces from Uchucchacua. At Mallay, silver production in the first quarter of 2015 was 3% higher than in the same quarter last year due to higher recovery rate. Cost applicable to sales in this quarter was 6% higher compared to the same quarter last year. Silver production guidance is somewhat between 1.1 million and 1.3 million ounces for this mine. At the old Julcani mine, silver production was 7% higher than the first quarter of 2014. Cost applicable to sales was 6% higher than the same quarter last year, explained by an increase in contractors and supply expenses due to more drilling and drifting activities. The guidance for this mine is between 2.9 million and 3.1 million ounces for all 2015. At La Zanja, where we control 53% ownership, the gold production decreased 15% when compared to the same quarter last year due to higher stripping ratio. Cost applicable to sales increased 49% mainly explained by higher contractor expenses associated with the hauling distance from Pampa Verde as well as additional acid water treatment costs. Gold production guidance is between 138,000 and 142,000 ounces of gold for this year. Tantahuatay, gold production decreased 7% compared to the figure reported in the same quarter of 2014. Cost applicable to sales increased 21% due to higher stripping ratio and lower ore grade in the current area of operation. Gold production guidance for 2015 is between 138,000 and 142,000 ounces of gold. At El Brocal, where we control 54%, during the first quarter, produced 3,869 metric tons of copper, 14,000 metric tons of zinc and 982,000 ounces of silver, a 97% increase when compared to 497,000 ounces of silver in the first quarter of 2014. Copper cost applicable to sales was 7% higher compared to the first quarter of 2014. Zinc production guidance for 2015 is between 75,000 and 85,000 metric tons and copper production guidance is between 30,000 and 35,000 metric tons. General and administrative expenses did well during this quarter and exploration in non-operated areas during the first quarter was $10.7 million, in-line with $10.4 million in the first quarter of 2014. During this period, Buenaventura's main exploration efforts were focused on La Zanja Underground and Tambomayo. During the first quarter, Buenaventura's share in associated companies was $36.3 million, compared to a negative $4.5 million reported in the same quarter last year. At Yanacocha during the first quarter, gold production was 248,000 ounces, 20% higher than the same period last year. 2015 gold production guidance for Yanacocha is close to between 880,000 and 940,000 ounces of gold. Under IFRS, Yanacocha reported $60 million of net income. It's $2.5 million under U.S. GAAP. In the first quarter of 2015, cost applicable to sales was $479 per ounce, a decrease of 56% compared to the same quarter last year. Capital expenditures at Yanacocha were $15 million in this quarter. At Cerro Verde, during this quarter copper production was 48,600 metric tons, a 20% decrease compared to the first quarter of 2014, due to a lower ore grade and recovery in copper concentrates. During this quarter, Cerro Verde reported a net income of $40.7 million, 59% lower compared to $98 million in the first quarter of last year. The decrease is primarily as a result of a decrease in net sales which is attributable to a 10% decrease in average realized copper price and lower copper sales volumes. Capital expenditures at Cerro Verde were $468.9 million in the first quarter and $439.4 million in 2014. Cerro Verde's plant expansion has an excess of 70% progress and completion is expected by fourth quarter of 2015. The total CapEx for the project continues to be $4.6 billion At Coimolache, attributable contribution to the net income in the first quarter was $2.1 million. In terms of our project development and exploration, the Tambomayo´s Environmental Impact Assessment was approved in January 2015. Construction permits are expected to be ready in the second quarter 2015 and 80% of the purchase orders have been placed. Tambomayo has 250,000 gold ounces in reserves and 335,000 gold ounces in resources. Additionally, Tambomayo has 9.4 million silver ounces in reserves and 5.9 million silver ounces in resources. The estimated annual production for this mine is between 110,000 and 120,000 gold ounces and 3 million ounces of silver. At San Gabriel, formally we call it Chucapaca, diamond drilling at the Pachacutec prospect and the beginning of construction of the San Gabriel ramp is expected to begin in May 2015. The Environmental Impact study of the project's construction is expected to be submitted to the authorities in the third quarter of 2015. San Gabriel has 2.5 million ounces of gold in resources. The estimated annual production is between 180,000 and 220,000 ounces of gold. With this, we are open to any questions that you may have.

[Operator Instructions]. Our first question comes from John Bridges of JPMorgan.

Good morning, everybody. Thanks, Roque and everybody. Just wondering about Brocal, you said that you have got to 16,000 tons per day. What was the average reports at Brocal for the quarter and how do you see the ramp up? You know, what's the decent average that we should use for Q2 as a tool per item?

You are talking about Brocal, no?

Yes.

Yes. Well, the ramp up has not been easy but we have been solving a number of problems. Problems dealing with mechanical problems with machines that essentially the crusher, the primary crusher, we had a number of problems. But we are ramping up and as we mentioned, I would say that we should we expect 18,000 tons per day for the second quarter.

Okay. So are you operating at 18,000 tons per day now?

We have gone over 18,000 tons on some days, but we are adjusting the whole processing facility and we do expect that 18,000 should be an average for the second quarter.

Perhaps one we have heard, that do we have to replace segments of this crushing machine every 10 days. This advises to stop this operation. That's why we are reporting. We have got to fix as an organization, but well, this established our idea is not to perform in an average.

We have had days over 20,000 tons per day but essentially that is not the ideal situation. The ideal situation is to have a very stable 18,000 tons per day throughput, no.

Absolutely. And then if I may, Cerro Verde, was it always planned to be commissioned in Q4? I thought it was Q3. Has there been delays with that? And are they, you know, the weakness that we saw in Q1, does that change your expectations for what we should expect from copper from Cerro Verde this year?

No, not really. Let me pass to Igor Gonzalez. He has been recently [ph] in Cerro Verde. Igor?

Yes. The first two mills should be running in September, early September and then from there on, there will be one additional mill every month going into operation. Of course, mill and associated equipment that goes with it, which is the crushers and the floatation sections. So the startup of the first two mills will be in September and then a month later there will be a third mill, until they complete the six mills that they need to start. And so that's the scheme. Nothing's changed. So hopefully by year-end and early 2016, the entire facility should be running.

Could you comment on how the project has been going? You have a lot of experience in building things in Latin America. Could you comments on that? There were some stories about some delays?

Actually the project has been going very well. For example, the project is on a schedule and also on budget and. The mine is currently doing a lot of the earthworks for the tailing facility. And we see a lot of activity in the mine. So we don't see major delays. As a matter of fact, they are already preparing for the preoperational testing and also filling some water in the reservoir to have enough water for startup of the mills.

Are they still borrowing trucks from the pit to do the earthworks? Or could we expect better valuables in the pit for the rest of the year?

Only for tailing facility they are using some. They are moving some rock from the pit. This is waste rock from the pit that is going to the tailing facility. But gradually they are building their truck fleet and putting more trucks into operation.

Okay. Brilliant. Many, many thanks. Really appreciate it. Good luck, guys.

Thank you. Our next question comes from Santiago Perez Teuffer from Credit Suisse.

Hello. Thanks, Carlos and Roque. Thanks for taking my question. My questions is related to a El Brocal. Can you give us your expectation in terms of when this one crusher and other projects comes into production? What do you expect in terms of zinc and silver? And especially at what cost and what margin, please? Thank you.

Well, in the case of El Brocal, you know that we have these two challenges. One just to achieve the volumes and on the other hand, how hard the rock that we crush is. And there are two issues, the copper ore which are very hard and we have a special sort of crushing equipment and on the other side, the poly-metallic has clay. So this is why we have to achieve not only to achieve not only the volumes but also controlling the mix of [indiscernible]. Due to this, it is pretty difficult at this point in time to establish what the final production will be for the year and the cash cost for everything in metal. However, we can review this to the extent that we reach the final volumes. We control only the 11,000 tons per day throughput for all poly-metallic ores and 7,000 tons per day for copper.

I would like to add that if we compare February to March, for example, in Brocal in terms of silver ounce, production has gone from to 275,000 to 495,000 ounces. So it's a significant increase. And this is roughly due to the tonnage. If we reduce the tonnage, we have gone from 215,000 in February to 512,000 in March. So as we ramp up the plant and get more throughput to the plant, also the production is taken up in Brocal in silver and also in the zinc. So I think we should expect that plan to continue until we reach nominal capacity.

Perfect. So in terms of merging for this year, I mean, is there any sense of profitability expectation you have at going prices?

We expect to, well, if everything goes well, we should obtain EBITDA in the order of $50 million to $60 million in Brocal. Mainly this is what we are working on. It was pretty difficult during the first quarter but one to the extent that we will reach the objective, this is going to be the primary result.

Perfect. Thanks a lot. That was useful, Carlos. Thanks a lot.

Thank you. Our next question comes from Carl Ludwin from Merrill Lynch.

Good morning, everyone. Thank you for the questions. I have two questions. My first one is a follow up on Cerro Verde. I remember you mentioned on the previous conference call that you were processing stockpiles and that was impacting, meaning lower grades and high cost, et cetera. How has this reverted? Have you already gone back to your traditional operation areas in Q2? And thus, we should expect recovering results on Cerro Verde in the second or third quarter before the expansion? That's my first question. And my second question is on Yanacocha, the potential expansion to the access, the sulfate deposits. Is this still ongoing and when should we have any potential updates on this, that would be great? Those are my questions. Thank you.

This is Raul Benavides. Well, we can expect some of the same for Cerro Verde for the rest of the year. We were still in the focus of the operation's expansion. So you will probably see low grades as compared to the last year. From the last thing, we saw they were opening the Santa Rosa mine and we believe the work that were doing in the tailing down, there were timeouts of certain degree. So yes, you can expect the same for this quarter. I don't think that you will get surprises and higher grades or things like that in Cerro Verde. In the case of the Yanacocha, Yanacocha has been producing, as you see, far lower waste from their operation and this has been the main reason of the good results of the this [indiscernible]. And we had been talking to the people at Newmont and we think that we have now a very, very clear path forward in this whole place that would go through the floatation of sulfates than in getting this copper sulfates in ordering the, I don't know, the next three years.

That's perfect, Raul. Thank you.

Thank you. Our next question comes from Tanya Jakusconek from Scotiabank.

Yes. Good morning, everybody. Thank you for taking my question. I just wanted to come back to Tambomayo and thank you very much for some of the details. I am still just missing the capital cost build and also the cash cost and the all-in sustaining cost for this asset.

Well, in the case of Tambomayo we are aiming to cap at fee lower of $250 million. We have already invested 50% of that. It is pretty well controlled. You know that that worked on the mine development and we have already, I will say, as we mentioned, the purchasing order. So we have fixed price of the equipment. So there's mainly the civil works that we have to carry out while we control that. Regarding the cash cost in operation of Tambomayo due to the quarries that we obtain from silver, the expectation is to achieve a cash cost in the order of $450 to $500 per ounce of gold. The all-in sustain cost must be in the order of, due to the prices and underground operation with a pretty smooth sustaining CapEx, it must be in the order of $750 to $800 at most per ounce of gold.

Okay. And just Carlos, for the CapEx, the $250 million, what is going to be spent this year and what is going to be spent in 2016?

We have already spent, as I mentioned, $125 million, $130 million, but the disbursement on the timing to deliver the equipment. So we have already paid for about 30% of that. It might be about 50/50 because we have to complete the disbursement of the other $60 million equipment and the rest is to the tender we have for the civil works.

So $125 million this year and $125 million in --?

No. It's in the order of $70 million this year and the rest for next year.

Okay. So $70 million this year and the --?

$60 million or we were talking about $125 million, yes. So it's $55 million to $60 million next year.

Okay. And Carlos, is your capital guidance for this year is still $270 million to $300 million? Does that include a $70 million for Tambomayo?

Yes. That's fine.

Okay. And then just lastly, on Breapampa, is it now just closed than on care on maintenance? Like what's happening at that asset?

Well, what we are doing is just leaching. We stopped the mining. And we are in the process and Raul perhaps can explain anything else.

We are harvesting from the leach bus. What we are doing is, we are giving the answers from the leach part but we are not moving there further. And we are in the process of selling it to a third party and we hope that this would be in a couple of months or so. So we expect to get out of Breapampa because its -- the good thing about this is that this will focus into the deep operation where we think that we have to do today and not take care of this small operation that don't generate much volume for the company.

Yes. Okay. No, that's perfect. And then maybe just my last question for Roque, just on Conga. Is there any update there? On new month call, they didn't give us an update.

No. I don't think that we are going into elections here in Peru and I don't think Conga will move in here. I think that will have to wait for the next administration, if any.

Okay. Thank you very much, everybody.

Thank you.

Thank you. Our next question comes from Faltier Shavapo from HSBC.

Good morning. Thank you for taking my questions. I have a couple of them. You are starting the ramp construction at San Gabriel and you also plan to build the Tambomayo project essentially within one year, with substantial remaining CapEx to be spent. You have $135 million in cash, but potentially you might need additional funding before Cerro Verde ramps up post expansion and begins generating free cash for you. What's your thinking on financing San Gabriel and Tambomaya? I guess, if you have to, will you be looking to possibly increasing your short-term bank loans further or perhaps take on longer term debt?

Well, we are giving them all chance we have. Mainly we are looking at long-term debt that we can raise. That depends on the subsidy we can raise. The time to expand up to investor, the sort of facility on the window of opportunities right now to raise some debt. I believe that this would be some syndication eventually.

This is Raul Benavides. I think that the ramp, the construction, that thing takes that much money and it's a process, you need to build an underground mine. That's the reason we are pushing very hard to ramp. But the ramp wouldn't take that much investment. So the big investment for San Gabriel will come next year.

Yes and that would match with the finishing of the construction of the Tambomayo and then we will start with San Gabriel. So I don't think there is going to be cash pressure in the case of this project.

We do not think of little projects bearing sequence, not so much in parallel.

Okay. I guess the other question is, are there any limits on your available credit that you have with your current lenders? And could you please maybe remind us what your current debt covenants are, if any?

Well, we have been talking to different banks and reviewing the best way to finance that. We are looking for flexibility and in time we will decide what mechanism to use.

Okay. Thank you.

[Operator Instructions]. We do have one question from Patrick Chidley from HSBC.

Hi, everybody. Just a quick question on cost trends that you are seeing. Can you comment on fuel prices in Peru that you are experiencing relative to last year? And are there any trends there in terms of maybe the delay from actual market prices to what you are seeing on the ground then?

Well, if I understood your question properly, the thing is, in Peru there is happening a devaluation essentially because of the strength of the U.S. dollar and we have some of our items in local currency and that is contributing to cost reductions in a sense in dollar terms. And inflation is essentially running at 2% to 3% and that is not putting a lot of pressure on cost. I think we have seen already an increase in cost and we don't foresee towards the future that we would have a pressure in that respect.

And not only that, the price of oil in Peru is still the same in the cost. The government has not transpired the lower oil price yet.

Not yet. But is that a possibility?

No, it's coming on the government's equation, the of fuel oil right on, to the extent that they are already incorporating the impact of the devaluation in April. So this is impacting us.

So something is still yet to come if the lower price filters through to what you are seeing there?

Yes.

And then just a quick follow-up there on Cerro Verde in terms of the ramp out there. You said you are going to have all six mills running by the end of the year including all of our artillery crushing and flotation machinery. Would you say that that's a hard, sort of that's including the ramp-up time, i.e., should we be at full production in 2016? Or is this still then beyond that sort of a ramp-up time to get to full production?

The ramp-up time is about six months. So what I mentioned is that they will start a mill, just about one mill every month after September, when they start two mills. But that doesn't mean that the mills immediately will get to nominal capacity. It will be a process. So that should take about six months.

But having said that, the equipment that has been bought and is being installed for the expansion are similar equipment to the ones that are currently in operation in the 120,000 tons per day mill. So the ramp up should be easier than in many other projects. We must trace the work that the people of Freeport have done in terms of the project. I think things are going very smoothly and we hope that will continue to be the case.

Great. Okay. So then we could say that by the middle of 2016, everything should be actually up 100% while it's going to be a gradual ramp-up between sort of September this year and the middle of 2016?

It could be even earlier than that but yes.

Well that was 3% o the mill at full capacity by June, July next year.

Okay. Good. All right. Well, thank you very much and congratulations on the quarter.

Your next question comes Hector Collantes from Credit Corp.

Hi. Thanks for taking my question. Could you give more comments on Yanacocha and what explains the difference between the IFRS $60 million in net income versus the $2.5 million under U.S. GAAP? Could you tell please tell us a little bit of what were the main differences?

Yes. Well, I wouldn't comment about accounting because that's Carlos' job, but I can tell you what is happening at the mine is that we were working last year on mainly taking the overburden of the Latina [ph] sewer expansion and today we have volumes with ore. And the ore happens to be very high grade in the lower parts that all fits in the parallel has been the very high grade ore compared to the ores of Yanacocha. So now that we have the overburden out we are benefiting from this high grade and we don't need that much tonnage in order to get the ounces. Now Carlos can explain you about the U.S. GAAP and the other system. I don't know understand much about that.

Yes. Well, I have the reconciliation of this figure between U.S. GAAP and IFRS. And mainly what happens is in the accounting issue, the level of taxation, while taxation according to IFRS is $23 million for the quarter, in terms of U.S. GAAP it was reported was $80 million. So mainly you have the main difference between the one and the other while in terms of the cost of sales, including depreciation, according to IFRS, the report is $182 million and in terms of U.S. GAAP, it's $179 million, a small differences in the order of things, but mainly coming from the taxation that we have already incorporated in the past, due to the part, under IFRS you have to calculate as before income tax that you account as an asset, before income tax as well. And this is what happens now in our internal report. If you look at our financial statements, shown in the back of our press release, you will find for instance and this is just an example, you have at the P&L our current income tax expense of $5.3 million, while you have $5 million as a deferred income tax that we account in our balance sheet as well. So it is a difference with the timing to report and how you report in advance certain issues. We have already incorporated in the past this taxation for Yanacocha as we are doing now with our accounts.

Well, thank you very much. It's been very helpful. Thank you.

You are welcome.

Thank you. Our next question comes from John Bridges of JPMorgan.

Hi. Thanks again. In an earlier answer, you said that you had a clear view now on what to do with the sulfides with Yanacocha. I just wondered if you could give us a little bit of an idea as to what that is? Is that going to be sulfides through the existing plant? And what sort of throughput should we expect? When should it begin and maybe what sort of grade do you think you will be putting into it?

Well, I think that no one should answer that question but we are working on that. We don't have straight answers for who puts or things like that. But we re discussing between putting flotation circuit after the gold or putting another mill in the floatation circuit. So I cannot answer what exactly we will do. But I believe what is different is that we both see, both companies see the future of Yanacocha with floatation.

Okay. That's great. What's the capacity of the existing plant?

Existing plant is about six million tons per year. It's 18,000 tons, I think, daily facility.

And would this be arsenical sulfide ore? Or have you found some clean ore to work with?

John, that's another discussion that we are having because here you have Yanacocha where it is mainly arsenical, but you have in [indiscernible] some sulfides that are not arsenical. The question is if we can sequence the mining in such a way that we can work with the sweet copper, but essentially we will have the problem of the arsenic in Yanacocha all the time. There are some sweet spots but mainly it's arsenical copper.

How is your pilot plant working to treat the sulfides?

Well, we are working on that. Right now we are finishing. We built the pilot plant that would take care of not-continuous treatment and we are working on getting this piloting into a continuous piloting so that we can be sure that all the variables are in line. But we still have a lot of way to go, John, I think that by the end of this year, we will have some answers.

Okay. Perfect. I will put that in my calendar for a question. Thank you, guys. Well done. Good luck.

Thank you. Our next question comes from Ana Zinser from Credit Suisse.

Hi. Good morning. Thank you for the call. Could you comment a bit more on the depreciation increase we saw on indirect operation? Could this be related to El Brocal or [indiscernible] write-down or to the exit of Breapampa? Thank you very much.

Regarding the depreciation, it come from Brocal that we completed this construction and we began to depreciate this investment at the end of last year. So we are comparing the depreciation accounted during this third quarter and comparable with the first quarter last year, you have a tremendous increase and the La Zanja expenses also.

Thank you very much. That was very useful.

Thank you. Our next question comes from Carlos De Alba from Morgan Stanley.

Yes. Good morning, gentlemen. So we saw a very good performance on the cost front in the quarter. So I just wonder how sustainable this is and if we can see further improvement in Uchucchacua and perhaps in Orcopampa, which it was good but not as good as we expected to see? What are the prospects of those two operations going forward?

We continue to do a lot of cost reviews in the operations. We are optimizing in all fronts, especially in contractor charges. And so we see a trend, slow, but it is a trend of a decreasing trend in contract or charges and we continue to negotiate with contractors to try to drop the cost, because the market, we are trying to accommodate ourselves to the current market conditions. So I shouldn't say it's going to be a trend, because the cost is also dependent on grade and tonnage. But we are seeing a downward trend in our cost and then also in the market.

We have an important window of opportunities to renegotiate with the contractor, especially with the equipment that they are using and the way we are going to manage that. We believe we are going to have a qualitative change in the way to work with these contractors and no doubt that we are going to reuse this cost in Orcopampa, in Uchucchacua and perhaps the most important part, in Tantahuatay.

All right. I do not know if you discussed this before, but the grade improvement in the Uchucchacua, sorry, the recovery rate in Uchucchacua, is this sustainable going forward and for that matter [indiscernible] as well?

Okay. That's a wonderful question because that is the reason why we have Rio Seco. Rio Seco has the exchange, the floatation circuit and that's the way that we have increased the recovery and we are producing a very high manganese silver concentrate. And that's what we are taking care in Rio Seco. So what happens is, as Rio Seco is, we are liberating the restrictions that we have exploration and mining in Uchucchacua.

Terrific. Good quarter. I think you needed to post these good numbers and the stock is reflecting that. Thank you.

Thank you. At this time I am showing no further questions. I will now turn the call back over to Mr. Benavides for closing remarks.

Well, thank you for attending this conference. So it's very good to exchange ideas and to receive your questions, because this makes us think a lot about our own operations. May I just let you know that we will be attending the Merrill Lynch conference in Barcelona and for those of you that would be there, we would be happy to meet with you and we would continue in touch further during the year. Thank you. And that will be filing our 20-F report today. So that is also a piece of information that may be interested. Thank you very much for attending and see you soon.

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect.