Good day, ladies and gentlemen. Welcome to the Compañía de Minas Buenaventura Third Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Please note that this call is being recorded. I'd now like to introduce your host for today's call, Mr. Rodrigo Echecopar, Investor Relations. Thank you. You may begin.

Good morning and welcome everyone. Presenting on the call today is Mr. Victor Gobitz, CEO. Also present and available for your questions are Mr. Leandro Garcia, Vice President and CFO; Mr. Juan Carlos Ortiz, Vice President of Operations; Raúl Benavides, Vice President of Business Development; and joining us today is Roque Benavides, our Chairman. Before we start today's call, we will make forward-looking statements that reflect the company's current expectations, our future plans and performance. These statements rely on assumptions of future events that may not prove to be accurate unless such being both risk and uncertainties. It is therefore possible that the actual results may materially differ from any forward-looking statements that we may make today. We lead to you our cautionary statements in the press release we filed on October 26, 2018. With that, I will now turn the call over to Mr. Victor Gobitz, CEO. Victor, please go ahead.

Thank you, Rodrigo. Good morning to all and thank you for attending this conference call. We are pleased to present the third quarter of 2018 results of Compañía de Minas Buenaventura. We have prepared a short PowerPoint presentation which is available in our web page. Before going further, please take a moment to review the cautionary statement shown here on Slide 2. Moving on to Slide 3, highlights were as follows; In the third quarter, EBITDA from our direct operation was $53.1 million compared to $118.4 million reported in the third a year ago, primarily due to lower metal prices and lower volume salt at Orcopampa and La Zanja mines. The third quarter adjusted EBITDA including our associated companies reached $143.1 million compared to $186.7 million in a year ago. In the third quarter net loss was $10.3 million compared to a net loss of $12 million dollars for the same period in 2017. The company's De-Bottlenecking program is proceeding well, with better than expected results. Estimated EBITDA for 2018 has increased from $15 million to $25 million to $28 million to $35 million. Buenaventura has successfully maintained its disciplined approach to capital allocation thereby generating free cash flow despite a lower EBITDA than previously budgeted. A dividend payment of 0.06 per share was approved by Buenaventura's Board. During the quarter the company benefited from its business interruption insurance or profit loss insurance related to problems detected with the 20x30 mill at El Brocal in May 2017. In this third quarter, the company received $10 million in advanced from a $55 million total possible claim. Moving on to Slide 4, financial highlights, total revenues in this third quarter was $271.9 million which is 26% lower in comparison to a year ago. Total revenues in the first nine months of this year were $911.4 million, which is 1% higher in comparison to a year ago. EBITDA from our direct operations in this third quarter equals $53.1 million, which is 55% lower the comparison to last year, mainly due to lower volume sold at Orcopampa, La Zanja and lower prices of all metal salt. EBITDA from our direct operations in the first nine months of this year was $239.3 million, which if 6% lower in comparison to last year. EBITDA including our affiliates in this quarter was $148.1 million, which is 23% lower in comparison to a year ago. EBITDA including our affiliates in the first nine months of this year was $407.9 million, which is 10% higher in comparison to a year ago. And the net loss in this quarter was $10.3 million compared to a net loss of $12 million a year ago. Net income in the first nine months of this year was $59.4 million, which if 13% higher than a year ago. Moving on to Slide 5, in this slide you can see waterfall variation between evaluated EBITDA from the first nine months of the year and the real EBITDA reached. The lower EBITDA was mainly explained by lower metal prices, lower volumes sold from Orcopampa, El Brocal and Uchucchacua, which was offset by the results our De-Bottlenecking program. Moving on to Slide 6, in this slide you can see that disciplined capital allocation, which allow us to continue generating positive free cash flow despite having EBITDA lower than budget. Moving on to Slide 7, we're showing our strategic map where we use our usual capital below from the lower Buenaventura as a visual index for the following slides. In the coming slides, we're going to see in more detail the results from our portfolio of operations Moving on to Slides 8 and 9, attributable production, total equity production in this third quarter was 165,000 ounces, which is 10% lower than the field reported last year. Since last year [ph] is mainly explained by lower production coming from La Zanja, which was part of the mining plan and Orcopampa as field C [ph] was announced, we have decided to prioritize the De-Bottlenecking program. Silver equity production for this quarter was 6.7 million ounces which was in line with the field reported last. In this quarter 15.5 thousand metric tons of zinc were produced, 17% higher in comparison to a year ago. This increase was mainly due to Uchuchacua and Tambomayo higher production. In third quarter lead equity production was 11.1 thousand metric tons, which is 18% higher in comparison to a year ago. Finally our copper equity production was 32.2 thousand metric tons also in line with field reported last year. Moving on to Slides 10 and 11, as you can see in the consolidated volume sold from our direct operation decreased in the case of gold, mainly due to lower volume sold from Orcopampa and La Zanja. In the case of silver the 12% decrease was explained by the lower volume sold at Uchuchacua. In the case of zinc the 2% increase is explained by more volume sold at Uchuchacua and Tambomayo. In the case of lead the 19% increase is explained by more volumes sold at Uchuchacua and at El Brocal. Finally, in the case of copper the 5% increase is explained by more volume sold at El Brocal. Moving on to Slide 12, the all-in sustaining cost from our direct operations in this quarter was $1,020 per ounce of gold, 15% higher in comparison to a year ago, mainly explained by lower volumes sold at Orcopampa and La Zanja. Now, also applicable to sales in this quarter were as follows for gold $848 per ounce, which is 15% higher than a year ago; for silver $10.16 per ounce, which is 10% lower than a year ago; for zinc $0.5 per pound, which is 49% lower than a year ago. Finally, in the case of copper, the cash cost was $1.5 per pound, which is 2% lower in comparison to a year ago. Moving on to Slides 13 and 14, you can see the volume of gold sold and the cost applicable to sales for it one of our gold assets. Moving on to Slide 15, you can see also the volume of silver as well as the cost applicable to sales for each one of the assets part of our portfolio. Moving on to Slide 16, you can see the volume of copper and also zinc sold as well as the cost applicable to sales for each one of the assets part of our portfolio. Moving on to the Slides 17 and 18, the De-Bottlenecking program which we are implementing in our four of the [ph] underground mines in progress, in order to become a more predictable company in terms of production and profitability, we have fully implement the De-Bottlenecking program which will allow us to operate efficiently and in addition increase the visibility of order sets for mine planning purposes. You can see we are providing an updated table to the main projects of this program with more details related to our excellence achieved in this quarter and what we expect for the fourth quarter of this year. In addition, we are sharing information regarding main activities for 2019 and 2020. More details regarding the additional EBITDA for 2019 will be announced in the coming conference call. Moving on to Slide 19, in the coming slides, we are going to see more detail the updated information regarding our portfolio of projects. Moving on to Slide 20, here we are presenting in one snapshot the current development level of each one of our projects. Moving on to Slides 21, 22 and 23, here it's important to highlight the following aspect. In the case of Rio Seco, semi-commercial process testing is underway. HATCH the consultant company has finished the review of the existing formation. They made a field visit and has also validated our scoping stage. In the case of Rio Seco's well environmental base line is underway and we are expected to reach pre-feasibility stage, PFS by the end of this year. In the case of Trapiche we have hired the consultant company M3. They have finished the review of 15 formation they made after the visit and our scoping stage were also validated. They're currently performing trail for studies and we expect to reach pre-feasibility stage by the first quarter next year. And in the case of San Gabriel, geomechanical model is updated, trade-off studies were performed. Currently we are working on selecting an appropriate mining method. We are expected to reach pre-feasibility stage by third quarter of this year. Moving on to Slide 24, thank you for your attention, I'll hand the call back to the operator to open the line for questions. Operator, please go ahead.

Certainly, [Operator Instructions] Our first question comes from the line of Carlos De Alba with Morgan Stanley.

Yeah, good morning Victor and everyone. Thank you for the opportunity. I just wanted to ask Alejandro or Victor can help me understand the big differences between the average metal prices in the third quarter and the realized prices that the company posted and that were highlighted in the results - on page two of the results. I understand that there is a provisional pricing affecting these realizations, but in our calculations, we - the discrepancy or the difference is the largest that we have ever seen. So if you can provide some color as to what happened in the quarter, if there were any particular circumstances that caused these difference in price realizations to increase materially? Thank you.

Thank you, Carlos. Thank you for your question. I'm going to hand over to Alejandro to answer that question.

Hi, Carlos. Mainly the big reason of this big difference is because we have declarations and sales open from the first and second quarter. Normally, maybe you're comparing the final price of the third quarter versus our realized price, but normally we have open sales - openly with the regions, open fields February, March or April, so there is some big price generated in those months like again can be $3,600 on the common prices in the level of 2,500 right. That is a big difference in our final declarations.

Alright, but then - so typically we use as a guide the last page of the resource page 27, you show there are reconsideration of the net profit to cash and cash from operating activities and there's a line they're called the provision for estimated for value often embedded - everything is related to concentrate sales and adjustments on open liquidations. And in the third quarter of 2018 was really low compared to other quarters and so that's what we were a little bit draw off by the numbers.

But if you see that in chart there you can see the big difference related to the last quarter - from the last year, 2017 the negative effect is [indiscernible] and you have to consider that this 495,000 or total nine months $15 million comes - we are getting back to the net loss, it's a - I thought we have already made to the sales.

Alright, thank you.

Okay, we will pause for one more moment to see if there are any other questions. [Operator Instructions] And we have questions from the line of John Bridges with J.P. Morgan Please go ahead.

Thanks Victor. I'd like to reiterate the confusion on pricing, sorry. If there's a way for you to sort of help us better understand how you get us those prices because we're used to the idea of contracts being open for a quarter or so, but if you can give us some more clarity on that that would make it easier for us to understand earnings particularly going forward. Thanks for the improved disclosure in the - in your presentation and I was just wondering also - I saw the - the brought down the guidance or so for 2018, how is production - how is - how are you thinking about gold and silver in 2019. Thank you.

John, good morning. Thank you for your question. Regarding the measure part, we're going to analyze and send you the information to clarify that consent. Regarding this year we said we have updated the silver guidance because you analyze with the details, we are increasing the production in the case of Uchucchucua from an area called Cachipampa with high grade of lead and zinc, but with lower content of silver. And also in that case of El Brocal we have some similarities. We are increasing the production on some area with some increased content of lead but lower content of silver. Particularly in the case of 2019, we are still discussing and reviewing that number. In the coming conference call we'll be able to share with you this information.

So the cost of silver, is that actually a positive and that you're focusing on maximizing profitability with the silver price at such low levels.

Yes, that's the concept. In the case of Uchucchucua we have an area with high concentrate as I said zinc and lead, lower content of silver, but we could obtain more profitability from this area, as well in that case of Orcopampa we have the option to release increase production from the underground mine or to increase the production from the open pit. So in these two cases we have some flexibility for the coming years.

Okay, that's interesting. You also are returning back capital spending, which projects are being slowed down, is that going to affect the advancement of your pipeline of projects.

No we are not differing any projects, but we said we have more disciplined capital allocation and here is Juan Carlos Ortiz, our Vice President of Operations. He could share with you some examples of how we are leading to improve our CapEx.

Hi, John, his is Juan Ortiz. Let you give you some example of the way we are revising the capital allocation for 2018. For instance in our gold mine, we have a problem with the biggest mill, the 20x30 mill, we saw that probably by the second quarter of the year, but as a backup plan, we have an additional mill ready to be installed at the plant. That construction was not needed, we still have the mill in the warehouse, why we stopped the construction and the installation of that mill as a backup for the big one that allows us to - we could call in the technician. The other thing for instance, we have to manage with mine planning in one of our operations, La Zanja operation. Based on that reduction in waste, we don't need to build waste down this year and we are evaluating, we will ever need to be of an additional waste on next year for La Zanja. And another example, we're working parallel, we're thinking to shut the Uchucchucua . We make a mine, we reviewed the mine plan as victor explained with Cachipampa. Based on this new mine plan we will need to see shaft this in time. We are focusing only on the used shaft and we postponed the deepening of the master shaft for probably next year, that's the way we are optimizing our capital allocation this year.

Okay, great. And you were you received ten million of the insurance claim. Are you going to get the balance of the fifty odd million and when is that likely to show up in the income statement?

We expect to close this case before the end of this year. As I was mentioning the current status, the polling was related to the Bill Gates board meeting that was attended by 30 people and Leandro will add some information regarding this case.

Yeah, John, how are you and good morning. Our total claim which is around $55 million and it's divided in three major concepts. First of all the claim related to the last volume which are around $23 million. The declines related [indiscernible] province is around $20.8million and most of commercial terms is $4 million. We have already received $10 million and it is accounted in our order and income, in our income statement. We expect to finish this negotiations with the insurance company before the end of this year.

So has the insurance company agreed that it's liable for the full 55 million?

Yeah, the main topics last year was to discuss - the one topic was their own course of these hurdles, this influence we find and the root cause of the action, we repair this morning is running very well. And the second topic was to assure that we have coverage, full coverage. This second stage has also reached, so we are in the last set of stages to discuss the numbers behind this profit loss. According to our numbers that means in the order of 55 and we expect to announce either before the end of this year the final set of this stage.

Okay, cool. Thank you so much. Good luck guys.

You're welcome.

Our next question comes from the line of Tanya Jakusconek with Scotiabank.

Yes, good morning gentleman. Just wanted to circle back to John's question on the Cap Ex, it has gone down to 80 million to 120 million 2018 and I see 70 million to 90 million as sustaining. What does - and you've mention the deferral of obviously the mill at El Brocal and tailing facility at La Zanja. Can you talk to us a little bit about what 2019 capital budget looks like and is 70 million to 90 million an appropriate sustaining number going forward and what do we look like on the development side?

Tanya, good morning, thank you for your question. Here is Victor, so for 2019 we - as I said also in terms of [indiscernible] we are still discussing this final number. But roughly speaking, we tend to be in the range of $100 million to $125 million. We have more - in comparison I remember that in the last conference call we were discussing the same topics - topic and we said around 150. We have a more positive outlook, in this case it's more in the range of 100 to 125.

Okay and is 70 million to 90 million still a reasonable sustaining number within that?

Yes.

Perfect, thank you very much.

You're welcome Tanya as usual.

Our next questions come from the line of Louis Potter [ph] with Compass Group.

Hi, guys. I just - if you could help me understand - Carlos has already asked this question, but it's still unclear to me the difference between realized prices and market prices. So actually if you think 30% discount is quite heavy.

Louis, thank you for your question regarding the commercial terms, you have to take into account that when you trade base metal concentrates you're receiving advance payments based in the current price, but the final liquidation as Leandro explained is regarding the final metal price. Sometimes you see them. The trend in the third quarter of this year we see a significant decrease in metal prices for zinc, for lead and also for copper. So that means that the final equation we receive - you have to register a discount, but probably Leandro will add some more updates.

Normally you have your provisional invoice and you see the price, the current price in that moment. This year we have a very big decrease from the first and second quarter to the third quarter. Our realized price taking into consideration they may get the effect that we have suffered from high prices. We - actually we received an advance payment against that traditional invoice, so final - when you already know the rotational period you know the final counting of that sale, you have to make an adjustment. Sometimes adjustment for the final - in the final invoice is negative against your advance payment received.

Okay, thank you. And how should I think about this going forward then? If commodity prices are low, so how should I model this going forward?

Yeah, look if - you remember we're hearing - we got in page 27 in our - from our report and you'll see in the line for a reason for estimated fair value of derivatives and phase adjustments, you see those 50 million accumulate in the year mostly 9 million is for already received final invoices and 6 million is coming from sales that is still open and you look at the quotation of the period settled. So we're recognizing 6 million that –the current cuts of the prices are giving this result to us. So If there is anything, any major things in the future prices, this current will return positive, if the prices - the forward prices will move forward [ph].

Okay, okay, thank you very much for the time to answer the questions. Thank you.

You are welcome Louis.

Thank you. [Operator Instructions] Our next questions are from the line of Carlos De Alba with Morgan Stanley.

Yes, thank you very much again. So just coming back we talk to the waterfall chart of Slide 5 and clearly the De-Bottlenecking efforts have partially offset the negative impact of lower volume but not quite and so just could you remind those again, what are the issues at El Brocal? Orcopampa, clearly there was the lower guidance as you are mining in more concentrated zones and the same in Uchucchacua, but El Brocal, could you remind us what is the issue there that is affecting volume this year versus what you had budgeted?

Yeah, sure Carlos, but there's no need for anything, in case of El Brocal we decided to increase the production from the open pit which means we have increased the production of lead and zinc instead of copper. The couple come from the underground mines. We decided to slow down in order to create a more smooth ramp up coming from the underground mine of El Brocal. That's the - it's not, as I said, it's not an issue what are the decisions made based on that we expect. At that moment, we expected a similar economic outcome, but certainly the significant decrease in lead and zinc make these differences.

Okay, so just to make sure I understand that and this was a management decision to reduce the copper output at El Brocal because that would benefit the ramp up of the of the plant. However, when the analysis was made the zinc and the prices were at a higher levels and the expectations were - was that those prices were going to remain relatively stable and because of that change that 27% that you have in there is really what is reflecting, is the lower - in a way the lower zinc and lead prices on top of the higher volumes for those metals that were going to in theory compensate for the lower copper production, right.

Right, exactly.

Okay, and what do you expect that it will be the benefit of this ramp up in El Brocal going forward. Would that - is that a cautious approach from a nearing point of view or is it going to result in higher volumes in the future that would hopefully compensate for part of this falling in these years EBITDA?

No, you've got to take into account that in the case of El Brocal, the long term we will be 100% underground mine, 100% producing copper concentrates. So we are very cautious in order to generate very robust mining interests in case of [indiscernible]. So in that case we decided to probably price our long term view not to delete the short term perspective.

Okay, alright. And gentlemen my final question just to confirm, so the expectation is that the company will get the full 55 million claim on El Brocal problem or business interruption problem paid for by the insurance company, right. So there's another 45 million to come?

Yeah, as Leandro said, I'm hoping they will see you soon the insurance company. We prefer to be cautious on open discussion and maximum value will be 55.

Okay, alright. Thank you very much.

You're welcome Carlos,

Thank you. This concludes our question-and-answer session. I'd like to turn the floor back to management for closing comments.

Okay. Thank you everyone for joining our conference call this morning. As a Buenaventura team, we are committed to developing the full potential of our existing assets through our De-Bottlenecking program, prioritizing the long-term perspective in order to become a more predictable company in terms of production and profitability. And in the case of our portfolio for growth, we are implementing a disciplined process for value generation to enhance as always in order to optimize our capital allocation. Thank you again and have a wonderful day.

This will conclude today's teleconference. You may disconnect your lines at this time. And thank you for your participation.