Buenaventura Announces First Quarter 2016 Results

Compañia de Minas Buenaventura S.A.A. (“Buenaventura” or “the Company”) (NYSE:BVN; Lima Stock Exchange:BUE.LM), Peru’s largest publicly-traded precious metals mining company, announced today results for the first quarter (“1Q16”) period ended March 31, 2016. All figures have been prepared in accordance with IFRS (International Financial Reporting Standards) on a non GAAP basis and are stated in U.S. dollars (US$).

First Quarter 2016 Highlights:

• In 1Q16, EBITDA from direct operations was US$60.3 million, a 34% increase compared to US$45.0 million reported in 1Q15. Adjusted EBITDA (including associated companies) increased 21% (US$ 145.1 in 1Q16 compared to the US$ 119.9 in 1Q15).
• All In Sustaining Cost (AISC) decreased 35% in 1Q16 (US$ 728/oz in 1Q16 compared to the US$ 1,126/oz in 1Q15). This significant decline reaffirms the cost reduction efforts in Buenaventura’s direct operations.
• Total attributable production in 1Q16 was 158k gold ounces and 6.0 million silver ounces, compared to 187k gold ounces and 5.5 million silver ounces in 1Q15.
• The Tambomayo project is in-line with budget; and the detail engineering was completed. Civil works’ progress is at 52% with full completion expected for 2Q16. Exploration and development works´ is at 86%. Production ramping up is expected by 4Q16.
• The Environmental Impact Assessment (EIA) of the San Gabriel project is expected to be approved in 4Q16 (the Public Hearing will be held in 2Q16).
• Yanacocha distributed dividends of US$300 million in March 2016 (Buenaventura received its equity share of US$131 million).
• At Cerro Verde, the Concentrator #2 achieved full capacity during 1Q16. In March, the mill rate performance was in excess of 370k tons per day.
• Buenaventura is in the process of raising US$ 275 million in long-term debt, in order to reprofile its current short-term debt. The proceeds are expected to be available in 2Q16; terms and conditions of the loan will be of an investment grade company.

Financial Highlights (in millions of US$, except EPS figures):

(*) as of March 31, 2016 Buenaventura had 254,186,867 outstanding shares.

Operating Revenues

During 1Q16, net sales were US$220.6 million, a 4% decrease compared to the US$230.4 million reported in 1Q15. This was mainly explained by the general decline in all metal prices (except for lead), as well as lower gold, lead and zinc volume sold. Silver volume sold increased 13% partially offsetting the decline in sales.

Royalty income decreased 26%, from US$9.1 million in 1Q15 to US$6.7 million reported in 1Q16. This was due to lower revenues at Yanacocha (27% lower QoQ).

Production and Operating Costs

In 1Q16, Buenaventura’s gold equity production from direct operations remained stable, in line with the figure reported in 1Q15 (79,233 ounces in 1Q16 vs. 79,192 ounces in 1Q15). Gold production, including associated companies, in 1Q16 was 157,955 ounces, 16% lower than the figure reported for the same period of 2015 (187,468 ounces), explained by a decrease in production from Yanacocha. Silver equity production from direct operations increased 11%, mainly due to higher production at the Uchucchacua mine and the Mallay mine.

Orcopampa’s (100% owned by Buenaventura)

Gold production at Orcopampa decreased 12% in 1Q16, compared to 1Q15, due to lower grade (Appendix 2).

Cost Applicable to Sales (CAS) in 1Q16 decreased 8%. This was mainly explained by:

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¹ Direct Operation production includes 100% of Buenaventura’s operating units, 53.06% of La Zanja, 56.29% of El Brocal and 40.10% of Coimolache.

Uchucchacua (100% owned by Buenaventura)

Silver production during 1Q16 increased 18% compared to 1Q15, due to higher ore treated and higher ore grade (Appendix 2).

Cost Applicable to Sales (CAS) in 1Q16 decreased 32% (US$ 10.58/oz of silver in 1Q16 compared to US$ 15.47/oz in 1Q15), mainly explained by:

Silver production guidance for 2016 is 15.5 million – 16.5 million ounces.

Mallay (100% owned by Buenaventura)

Silver production in 1Q16 increased 33% compared to 1Q15, due to higher ore treated (Appendix 2).

Cost Applicable to Sales (CAS) in 1Q16 decreased 17% (US$ 11.93/oz of silver in 1Q16 compared to US$ 14.39/oz in 1Q15) due to lower consumable costs, mainly in explosive materials and reagents.

Silver production guidance for 2016 is 1.5 million – 1.9 million ounces.

Julcani (100% owned by Buenaventura)

Silver production in 1Q16 increased 4% compared to 1Q15 production, due to higher ore treated and higher ore grade (Appendix 2).

Cost Applicable to Sales (CAS) in 1Q16 decreased 19% (US$ 10.66/oz of silver in 1Q16 compared to US$ 13.24/oz in 1Q15) explained by lower labor and consumable costs (explosive materials).

Silver production guidance for 2016 is 3.0 million – 3.4 million ounces.

La Zanja (53.06% owned by Buenaventura)

Gold production in 1Q16 increased 12% compared to 1Q15, due to higher ore leached.

Cost Applicable to Sales (CAS) in 1Q16 decreased 23% (US$ 597/oz of gold in 1Q16 compared to US$ 779/oz in 1Q15) explained by lower labor and reagent costs.

Gold production guidance for 2016 is 130k – 140k ounces.

Tantahuatay (40.10% owned by Buenaventura)

Gold production in 1Q16 increased 14% compared to 1Q15, due to higher ore grade.

Cost Applicable to Sales (CAS) in 1Q16 decreased 34% (US$ 427/oz of gold in 1Q16 compared to US$ 650/oz in 1Q15) due to lower contractor and reagent costs.

Gold production guidance for 2016 is 140k – 150k ounces

El Brocal (56.29% owned by Buenaventura)

During 1Q16, copper production increased 193% compared to 1Q15, mainly due to higher ore treated. Moreover, in 1Q16 zinc production decreased 29%, due to lower ore treated and a lower zinc grade.

In 1Q16, zinc Cost Applicable to Sales (CAS) remained in line with the figure reported during 1Q15. Additionally, copper Cost Applicable to Sales (CAS) in 1Q16 decreased 13% (US$ 4,823/MT of copper in 1Q16 compared to US$ 5,536/MT in 1Q15), mainly explained by lower contractor costs due to better mining unit prices.

Zinc production guidance for 2016 is 60k – 70k MT, while copper production guidance for 2016 is 35k – 45k MT.

General and Administrative Expenses

General and administrative expenses in 1Q16 were US$21.4 million, an increase of 4% compared to the US$20.7 million reported in 1Q15.

Exploration in Non-Operating Areas

Exploration in non-operating areas during 1Q16 was US$3.5 million compared with the US$10.7 million in 1Q15. During the period, Buenaventura’s main exploration efforts were focused on the Tambomayo project (US$1.8 million) and Marcapunta (US$0.3 million).

Share in Associated Companies

During 1Q16, Buenaventura’s share in associated companies was US$28.4 million, compared to the US$36.3 million reported in 1Q15, comprised by:

YANACOCHA

At Yanacocha (43.65% owned by Buenaventura), during 1Q16, gold production was 180,348 ounces, 27% lower than 1Q15 production (248,055 ounces), due to a lower gold grade.

Gold production guidance at Yanacocha for 2016 is 630k – 660k ounces.

In 1Q16, Yanacocha reported net income of US$8.5 million compared to the US$37.4 million reported in 1Q15, mainly explained by lower volume sold (179k gold ounces sold in 1Q16 compared to 246k gold ounces sold in 1Q15). Cost Applicable to Sales (CAS) in 1Q16 was US$734/oz, 53% higher than the US$479/oz reported in 1Q15, mainly due to: i) a higher inventory write-down (US$28.0 million in 1Q16 compared to US$4.5 million in 1Q15), and ii) lower volume sold.

Capital expenditures at Yanacocha were US$13.7 million in 1Q16, while for 1Q15 it was US$15.2 million.

Yanacocha continues to have a strong pipeline of growth projects, this include: Quecher Main (prefeasibility), Chaquicocha Sulphides and Yanacocha Verde (scoping) and Maqui Maqui (exploration).

CERRO VERDE

At Cerro Verde (19.58% owned by Buenaventura), during 1Q16 copper production was 123,414 MT (24,164 MT attributable to Buenaventura), a 154% increase compared to 1Q15 (48,623 MT and 9,520 MT attributable to Buenaventura).

During 1Q16, Cerro Verde reported a net income of US$96.9 million compared to the US$40.7 million reported in 1Q15. This was mainly due to higher volume sold and a lower cash cost (US$ 1.2/lb of copper in 1Q16 compared to US$ 1.9/lb in 1Q15).

Capital expenditures at Cerro Verde were US$72.7 million in 1Q16, 84% lower compared to the US$468.9 million reported in 1Q15.

Cerro Verde’s plant expansion was completed in-line with schedule and budget (US$4.6 billion), becoming the largest concentration facility in the world. Full capacity operating rates were achieved during 1Q16. In March 2016, the average daily throughput was 373 TPD, higher than the nominal capacity of 360K TPD.

Copper production guidance at Cerro Verde for 2016 is 500k MT – 550k MT.

COIMOLACHE (Tantahuatay operation)

At Coimolache (40.10% owned by Buenaventura), attributable contribution to the net income in 1Q16 was US$ 5.7 million compared to the US$ 2.1 million reported in 1Q15.

Project Development and Exploration

The Tambomayo Project (100% ownership)

• Production ramp-up is expected to start in 4Q16
• Civil works progress is at 52% (expected to be completed in 2Q16)
• Mechanical and structural installation works at 35% progress (expected to be completed in 3Q16)
• The mill equipment is already mounted on their bases
• CAPEX: US$ 340 M (Total disbursement as of 1Q16 US$192 M)
  • Exploration and mine development US$122 M (disbursement as of 1Q16 US$102 M)
  • Civil works and Equipment US$218 M (disbursement as of 1Q16 US$90 M)

The San Gabriel Project (100% ownership)

• The project has been rescheduled in order to preserve cash flow
• Geomechanical studies were completed in 1Q16
• Environmental Impact Assessment (EIA) of the project´s construction is expected to be approved in 4Q16 (the Public Hearing will be held in 2Q16)
• Objectives for 1S16:
  • Continue the construction of a 450 meters exploration ramp
  • Drilling program: 7,000 meters (1,000 as of 1Q16) in order to confirm resources and certainty

Buenaventura's Cash and Debt Situation

• Currently Buenaventura is in the process of raising a US$ 275 million long-term loan. The proceeds are expected to be available in 2Q16.

• Yanacocha distributed a cash dividend of US$ 300 million

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Company Description

Compañía de Minas Buenaventura S.A.A. is Peru’s largest, publicly traded, precious metals company and a major holder of mining rights in Peru. The Company is engaged in the mining, processing, development and exploration of gold and silver and other metals via wholly owned mines as well as through its participation in joint exploration projects.

Buenaventura currently operates several mines in Peru (Orcopampa*, Uchucchacua*, Mallay*, Julcani*, El Brocal, La Zanja and Coimolache and is developing the Tambomayo and San Gabriel projects.

The Company owns 43.65% of Minera Yanacocha S.R.L (a partnership with Newmont Mining Corp.), an important precious metal producer; 19.58% of Sociedad Minera Cerro Verde, an important Peruvian copper producer.

For a printed version of the Company’s Form 20-F, please contact the investor relations contacts on page 1 of this report, or download the PDF format file from the Company’s web site at www.buenaventura.com.

(*) Operations wholly owned by Buenaventura

Note on Forward-Looking Statements
This press release may contain forward-looking information (as defined in the U.S. Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties, including those concerning the Company’s, Yanacocha’s and Cerro Verde’s costs and expenses, results of exploration, the continued improving efficiency of operations, prevailing market prices of gold, silver, copper and other metals mined, the success of joint ventures, estimates of future explorations, development and production, subsidiaries’ plans for capital expenditures, estimates of reserves and Peruvian political, economic, social and legal developments. These forward-looking statements reflect the Company’s view with respect to the Company’s, Yanacocha’s and Cerro Verde’s future financial performance. Actual results could differ materially from those projected in the forward-looking statements as a result of a variety of factors discussed elsewhere in this Press Release.

**Tables to follow**

APPENDIX 1

Note:
EBITDA (Buenaventura Direct Operations) consists of earnings before net interest, taxes, depreciation and amortization, share in associated companies, net, loss on currency exchange difference, other, net, provision for workers’ profit sharing and provision for long-term officers’ compensation.

EBITDA (including associated companies) consists of EBITDA (Buenaventura Direct Operations), plus (1) Buenaventura’s equity share of EBITDA (Yanacocha) (2) Buenaventura’s equity share of EBITDA (Cerro Verde), plus (3) Buenaventura’s equity share of EBITDA (Coimolache). All EBITDA mentioned were similarly calculated using financial information provided to Buenaventura by the associated companies.

Buenaventura presents EBITDA (Buenaventura Direct Operations) and EBITDA (including affiliates) to provide further information with respect to its operating performance and the operating performance of its equity investees, the affiliates. EBITDA (Buenaventura Direct Operations) and EBITDA (including affiliates) are not a measure of financial performance under IFRS, and may not be comparable to similarly titled measures of other companies. You should not consider EBITDA (Buenaventura Direct Operations) and EBITDA (including affiliates) as alternatives to operating income or net income determined in accordance with IFRS, as an indicator of Buenaventura’s, affiliates operating performance, or as an alternative to cash flows from operating activities, determined in accordance with IFRS, as an indicator of cash flows or as a measure of liquidity.

APPENDIX 4: COST APPLICABLE TO SALES RECONCILIATION

Reconciliation of Costs Applicable to Sales and Cost Applicable to Sales per Unit Sold

Cost applicable to sales consists of cost of sales, excluding depreciation and amortization, plus Selling expenses. Cost applicable to sales per unit sold for each mine consists of cost applicable to sales for a particular metal produced at a given mine divided by the volume of such metal produced at such mine in the specified period. We note that cost applicable to sales is not directly comparable to the cash operating cost figures disclosed in previously furnished earnings releases.

Cost applicable to sales and Cost applicable to sales per unit of mineral sold are not measures of financial performance under IFRS, and may not be comparable to similarly titled measures of other companies. We consider Cost applicable to sales and Cost applicable to sales per unit of mineral sold to be key measures in managing and evaluating our operating performance. These measures are widely reported in the precious metals industry as a benchmark for performance, but do not have standardized meanings. You should not consider Cost applicable to sales or Cost applicable to sales per unit of mineral sold as alternatives to cost of sales determined in accordance with IFRS, as indicators of our operating performance. Cost applicable to sales and Cost applicable to sales per unit of mineral sold are calculated without adjusting for by-product revenue amounts.

The tables below set forth (i) a reconciliation of consolidated Cost of sales, excluding depreciation and amortization to consolidated Cost applicable to sales, (ii) reconciliations of the components of Cost applicable to sales (by mine and mineral) to the corresponding consolidated line items set forth on our consolidated statements of profit or loss for the three and six months ended June 30, 2014 and 2015, and (iii) reconciliations of Cost of sales, excluding depreciation and amortization to Cost applicable to sales for each of our mining units. The amounts set forth in Cost applicable to sales and Cost applicable to sales per unit sold for each mine and mineral indicated in the tables below can be reconciled to the amounts set forth on our consolidated statements of profit or loss for the three and six months ended June 30, 2014 and 2015 by reference to the reconciliations of Cost of sales, excluding depreciation and amortization (by mine and mineral), Selling Expenses (by mine and metal) expenses and Exploration in units in operations (by mine and mineral) to consolidated Cost of sales, excluding depreciation and amortization, consolidated Selling Expenses and consolidated Exploration in units in operations expenses, respectively, set forth below.